FTC Loses Bid for Preliminary Injunction. MSFT can close with ABK after a year and a half.

FTC You Later

The final decision has come in the FTC vs. MSFT case over the latter’s acquisition of Activision-Blizzard-King. Not only did the FTC lose but the judge altered the temporary restraining order (TRO) so that the deal could be closed any time after 11:59 pm PDT on July 14th. That gets it in well under the 18th closing date agreed to last January as a final cutoff date.

Judge Jacqueline Scott Corley disagreed with the FTC’s assertion that Xbox had an incentive to take Call of Duty off Playstation consoles and their attempts to paint the Nintendo Switch as part of a different market. This is potentially the “beginning of the end” for what has become an incredibly long regulatory process. The CMA in England, in a similar attempt as the FTC, has blocked the merger “worldwide”. Theoretically, MSFT can begin closing the deal on the 15th, though how they would go about that is unclear.

Microsoft’s acquisition of Activision has been described as the largest in tech history. It deserves scrutiny. That scrutiny has paid off: Microsoft has committed in writing, in public, and in court to keep Call of Duty on PlayStation for 10 years on parity with Xbox. It made an agreement with Nintendo to bring Call of Duty to Switch. And it entered several agreements to for the first time bring Activision’s content to several cloud gaming services.
This Court’s responsibility in this case is narrow. It is to decide if, notwithstanding these current circumstances, the merger should be halted—perhaps even terminated—pending resolution of the FTC administrative action. For the reasons explained, the Court finds the FTC has not shown a likelihood it will prevail on its claim this particular vertical merger in this specific industry may substantially lessen competition. To the contrary, the record evidence points to more consumer access to Call of Duty and other Activision content. The motion for a preliminary injunction is therefore DENIED.

Judge Corley

Most of the document is redacted but there is one spicy section that delves into Sony’s market-leader practices when it comes to acquiring exclusive content.

In addition to exclusivity, Sony also uses its market power to extract other preferential
treatment from third-party game developers, including earlier release dates, exclusive marketing
agreements, and exclusive in-game content. (Dkt. No. 282, 6/22/23 Tr. (Bond) at 162:1–4, 186:5–

Judge Corley

The redacted decision:

Florian is very, very happy.

Jesse 'Doncabesa' Norris

Proud father of two, lucky to have a wife far too good for me. I write a ton of reviews, am a host on the You Had Me At Halo podcast, and help fill out anywhere I can for our site.

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