Microsoft’s $69 billion acquisition of game publisher Activision Blizzard cleared a big hurdle on Tuesday when a federal judge ruled against the US Federal Trade Commission’s attempt to delay the deal.
Judge Jacqueline Scott Corley of the US District Court for the Northern District of California denied the FTC a preliminary injunction that aimed to halt the deal while legal challenges unfolded, according to a report from CNBC. The judge said the FTC didn’t prove how the acquisition would harm competition within the video game industry.
The FTC filed a lawsuit against the tech giant last year, saying the planned acquisition would “enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription and cloud-gaming business.” Last month, the commission filed an injunction seeking to block the companies from closing the deal.
The FTC on Tuesday said it’s disappointed with the judge’s decision and will announce its next step soon.
Microsoft first revealed its plans to acquire Activision Blizzard in January 2022. Closing the deal would turn Xbox maker Microsoft into one of the top three video game publishers, right behind rival Sony. Activision Blizzard is one of the largest third-party publishers, with some major franchises that would give a much-needed boost to Microsoft’s games catalog, including Call of Duty, Candy Crush and Overwatch.
Although Microsoft has won a few merger-related battles, it still has hurdles to clear.
Who’s left to approve the deal?
Microsoft has yet to receive approval from regulators in the US. The FTC’s lawsuit from December is set to be heard in court on Aug. 2, though Microsoft and Activision set an initial deadline of July 18 to close the deal.
The UK is another major country that has yet to sign off on the deal. In April, the UK’s Competition and Markets Authority blocked the $69 billion deal, saying it would result in higher prices and fewer choices for gamers. Microsoft’s appeal to the ruling says the CMA “made fundamental errors in its calculation and assessment of market share data for cloud gaming services by failing to take account of constraints from native gaming (whereby gamers access games installed on their devices through a digital download or physical disc).”
Microsoft has continued to deny that the deal would hamper competition within the video game industry and continues to negotiate with regulators to get approval.
What does this deal mean for gamers?
For Xbox Game Pass subscribers, the deal means Activision Blizzard’s catalog of games will be incorporated into the service, likely similar to how Bethesda games were when Microsoft acquired that company in 2020.
How gamers who don’t have an Xbox, and instead use a Sony PlayStation or Nintendo Switch console, will be affected is less clear. Critics of the deal are concerned that Microsoft could make future games developed by Activision unavailable on rival consoles. (Microsoft did just this for games developed by Bethesda.) This is especially concerning for a major Activision title like Call of Duty.
Microsoft already agreed to a 10-year deal with Nintendo to bring Call of Duty games to its consoles, but Sony reportedly rejected a similar agreement. Sony remains against the deal and continues to submit filings to regulators about its concerns over the acquisition.
What is cloud gaming?
Cloud gaming is the technology to stream video games remotely to a device such as a phone, tablet or smart TV. While the technology has been around for more than a decade, it’s only in recent years that it’s really taken off, thanks in part to it being an added feature for Microsoft’s Xbox Game Pass and Sony’s PS Plus.
Other companies developed their own cloud gaming services, such as Amazon’s Luna and GeForce Now. The former made an agreement with Microsoft in February to bring more of its games to the service over the next 10 years.