US Judge’s Rejection Boosts Microsoft’s Prospects to Acquire Activision Blizzard.
Microsoft’s bid to acquire major games publisher Activision Blizzard received a significant boost as a US judge dismissed regulators’ request to block the deal.
Following the favorable ruling, Microsoft stated its intention to address concerns raised in the UK.
If successful, the merger between the tech giant and the owner of Call of Duty would mark the largest deal in gaming industry history.
Activision’s stock surged over 10% as investors bet on the deal’s success.
US regulators had argued that the $69 billion (£56 billion) deal would harm gamers and stifle competition by granting Microsoft, known for its Xbox console, the ability to deny rivals access to Activision’s games.
However, Judge Jacqueline Scott Corley expressed doubt that the regulators’ case would prevail.
In the strongest indication yet that the acquisition will proceed, the US ruling follows approval from the European Union, while a challenge to block the merger in the UK is currently being appealed. Microsoft President Brad Smith expressed gratitude for the swift decision and affirmed the company’s focus on addressing UK concerns.
Both Microsoft and the UK’s Competition and Markets Authority agreed to pause litigation while seeking a resolution to the concerns, particularly regarding the cloud gaming market.
Microsoft’s purchase of Activision is seen as a strategic move to compete with market leaders PlayStation and Nintendo by investing heavily in gaming content, enticing players to choose its platforms, including the Xbox console.
Activision Blizzard is responsible for popular titles such as Call of Duty, World of Warcraft, Diablo, and Overwatch, and owns mobile games developer King, creator of Candy Crush.
The fate of the Call of Duty franchise played a crucial role in regulators’ arguments.
Sony’s PlayStation head, Jim Ryan, who supported the regulators’ stance, suggested that Microsoft might limit access to the series for PlayStation users or provide them with an inferior version.
Microsoft countered by offering Sony a 10-year licensing agreement for the game and asserting that it made no financial sense to restrict access to such a massive player base.
Activision Blizzard CEO Bobby Kotick expressed optimism about the ruling, believing it signals a path to global regulatory approval. He pledged to work with UK regulators to address any remaining concerns to expedite the merger’s completion.
The US decision does not mark the end of the process as the FTC can appeal the ruling. Additionally, the FTC has separately challenged the merger in an administrative court.
FTC spokesperson Douglas Farrar expressed disappointment in the outcome, citing the threat the merger poses to competition in cloud gaming, subscription services, and consoles. The FTC plans to announce its next steps to preserve competition and protect consumers in the coming days.