The FTC loses appeal to be granted a injunction against Microsoft & ABK but, is a Game Over?

After nearly two years of legal battles, regulatory hurdles, and intense scrutiny, Microsoft has emerged victorious in its fight to acquire Activision Blizzard. The U.S. Federal Trade Commission (FTC), which had been one of the most vocal opponents of the deal, recently lost its appeal against an injunction that sought to block the acquisition. This marks the definitive end of the FTC’s legal challenge and clears the path for Microsoft to fully integrate Activision Blizzard into its gaming empire.

Microsoft’s $68.7 billion acquisition of Activision Blizzard was announced in January 2022, sending shockwaves through the gaming industry. The deal promised to bring some of the most iconic gaming franchises—such as Call of Duty, World of Warcraft, and Diablo—under Microsoft’s umbrella. However, regulators worldwide raised concerns about potential anti-competitive practices, particularly regarding Microsoft’s control over cloud gaming, subscription services, and console exclusivity.

The FTC was one of the most aggressive challengers to the deal. It argued that Microsoft’s ownership of Activision Blizzard could lead to unfair market advantages, such as making Call of Duty exclusive to Xbox or degrading its quality on rival platforms like PlayStation. The agency sought a preliminary injunction to halt the acquisition while it pursued further legal action.

The Legal Struggle: Microsoft vs. The FTC

In July 2023, Judge Jacqueline Scott Corley of the Northern District of California ruled against the FTC’s request for a preliminary injunction, stating that the agency had failed to prove that the merger would substantially lessen competition. The FTC then appealed the decision to the Ninth U.S. Circuit Court of Appeals, hoping to overturn the ruling and extend the temporary restraining order preventing Microsoft from closing the deal.

However, the appellate court unanimously ruled in favor of Microsoft, affirming that the district court had applied the correct legal standards in its decision. The judges found that the FTC had not sufficiently demonstrated that Microsoft would foreclose competition in the console, subscription, or cloud gaming markets. They also noted that Activision Blizzard had historically resisted putting its games on subscription services, meaning that Microsoft’s acquisition would actually introduce new content to that market rather than restrict it.

The Fallout: What This Means for Gaming

With the FTC’s appeal denied, Microsoft is now free to finalize its acquisition of Activision Blizzard in the U.S. The company had already secured approvals from regulators in the European Union, Japan, and Brazil, leaving the FTC and the UK’s Competition and Markets Authority (CMA) as the last major obstacles. While the CMA initially blocked the deal, Microsoft later reached an agreement with the UK regulator, allowing the acquisition to proceed.

Interestingly, Microsoft’s post-acquisition strategy has defied expectations. Instead of making Call of Duty exclusive to Xbox, the company has embraced a multiplatform approach, bringing its games to PlayStation and even Nintendo consoles. This shift suggests that Microsoft is prioritizing broader accessibility and revenue generation over exclusivity.

The FTC’s loss in court marks the end of a long and contentious battle over Microsoft’s acquisition of Activision Blizzard. While the agency had legitimate concerns about market competition, the courts ultimately found that the merger would not substantially harm consumers or rival companies. As Microsoft moves forward with integrating Activision Blizzard, the gaming industry will be watching closely to see how this historic deal reshapes the landscape.