Microsoft emerges victorious in the lawsuit filed by FTC, now set to complete Activision Blizzard acquisition

FTC bows down as Microsoft wins lawsuit at the federal court!

The Federal Trade Commission, abbreviated as the FTC, is the United States of America‘s regulatory body that scrutinizes the country’s trade, acquisitions, and sales and monitors actions that might not be the best for the collective interest. The same FTC had issued a lawsuit where the multinational tech corporation Microsoft for unfair acquisition, regarding their buyout of Activision Blizzard and has now lost the case in a court of law. As reported by The Verge, the judge had decided to deny the regulator’s request for a preliminary injunction.

Microsoft x FTC Lawsuit: Grounds for the lawsuit and eventual outcome

On the 12th of last month, that is, June of 2023, FTC filed a lawsuit against the corporate giant Microsoft in a bid to curb their $69 billion buyout of the esteemed game-developing company Activision Blizzard. The lawsuit was fought between the regulatory body and the corporate company in the US federal court where today the jury ultimately ruled that the deal is in no way detrimental and is instead beneficial for several parties involved.

The reason behind the lawsuit as stated by FTC is that such a large takeover, which is not Microsoft’s first in the gaming world, is ruining the balance between the developers and killing the competition in the market that is one of the reasons why these companies strive to create new titles year after year. Activision runs one of the most successful franchises in gaming, namely the Call of Duty franchise, which is available on PS4 as part of a deal with Sony.

Microsoft x FTC Lawsuit
Image via FTC

FTC claimed that such deals might fall through as Microsoft will keep buying more stakes and ultimately buy out all their competition. But Microsoft retorted by stating that they will honour the Sony deal for another 10 years., as well as make an agreement with Nintendo to bring the games on Switch as well. “We’re grateful to the court for swiftly deciding in our favour. The evidence showed the Activision Blizzard deal is good for the industry and the FTC’s claims about console switching, multi-game subscription services, and cloud don’t reflect the realities of the gaming market,” said Xbox head Mr. Spencer.

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, judge of US federal court overseeing the lawsuit

Just like the FTC of the USA, the Competition and Markets Authority, or the CMA, the trade regulator of the UK has sued Microsoft on similar grounds and had a hearing pending on the 28th of July, 2023. But following the victory of Microsoft against the FTC, the CMA hearing has been put on hold as the regulatory body will open discussions with Microsoft to come to a conclusion and solve their differences without any legal hassle.

Image via CMA

“After today’s court decision in the U.S., our focus now turns back to the UK. While we ultimately disagree with the CMA’s concerns, we are considering how the transaction might be modified in order to address those concerns in a way that is acceptable to the CMA,” says Microsoft president Brad Smith in a statement to The Verge. “In order to prioritize work on these proposals, Microsoft and Activision have agreed with the CMA that a stay of the litigation in the UK would be in the public interest and the parties have made a joint submission to the Competition Appeal Tribunal to this effect.”

Brad Smith, President of Microsoft

Final Thoughts

We can say that the way one lawsuit turned out and the other is going, it is fair to call it a victory for a company that has claimed it wants to make the games more accessible and improve the overall experience of the consumers. The Microsoft headquarters, as it stands now, should be very content as their $69 billion dollar deal is going just the way they wanted, in their favour.

What are your thoughts on the legal tussles that Microsoft is having to endure? Let us know in the comments below!

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