The 9th U.S. Circuit Court of Appeals, based in San Francisco, has upheld a pivotal ruling concerning the proposed merger between Microsoft and Activision Blizzard. This ruling supports a previous decision made by a lower court, which determined that the Federal Trade Commission (FTC) was not entitled to a preliminary injunction that would halt the merger. The deal officially closed in late 2023, marking a significant moment in the video gaming industry.
The decision arises from an antitrust lawsuit filed by the FTC in 2022 against Microsoft, the renowned maker of Xbox. The FTC, an agency responsible for enforcing antitrust law, initiated a separate administrative challenge against the merger. However, this proceeding was paused in 2023 as the Biden administration awaited the outcome of the 9th Circuit's deliberations.
The Activision Blizzard transaction is notable for being the largest acquisition in the history of the video gaming market. This monumental deal received approval from competition authorities in the UK, although it faced regulatory scrutiny in various international markets. The FTC's lawsuit aimed to freeze the Activision transaction while the agency pursued its separate administrative challenge.
The FTC argued that the merger would enable Microsoft to enhance its competitive edge against other companies in the gaming sector, particularly concerning the Xbox console and its subscription as well as cloud-based gaming services. U.S. District Judge Jacqueline Scott Corley previously ruled in July 2023 that the FTC had failed to demonstrate that Microsoft’s ownership of Activision would significantly diminish competition within the video game library subscription and cloud gaming markets.
In its appeal, the FTC contended that the lower court had applied an overly strict standard in assessing whether to grant the preliminary injunction. The implications of this ruling are significant, as it sets a precedent for how future mergers and acquisitions in the tech and gaming industries may be evaluated under antitrust laws.
A spokesperson for the FTC declined to provide comments regarding the ruling, while Microsoft did not respond immediately to requests for comment on the matter. This legal battle continues to unfold, highlighting the ongoing tensions between regulatory bodies and major tech companies in the evolving landscape of the gaming industry.
