Still don’t understand the fixation on cloud gaming.
A California judge has ruled in favor of Microsoft in their most recent case preventing their merger with Activision Blizzard. While they still face an Antitrust trial against the FTC in the coming months, Judge Jacqueline Scott Corley has ruled against granting the FTC’s request for a preliminary injunction against the deal. From Judge Corley’s ruling:
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 Jacqueline Scott Corley
Microsoft has naturally responded favorably to the decision. Microsoft president Brad Smith Tweeted out the following:
We’re grateful to the Court in San Francisco for this quick and thorough decision and hope other jurisdictions will continue working towards a timely resolution. As we’ve demonstrated consistently throughout the process, we are committed to working creatively and collaboratively to address regulatory concerns.
Brad Smith, Vice Chair and President, Microsoft
Xbox head Phil Spencer, who was a witness in the trial, did much the same:
Activision Blizzard is also quite happy (at least as much as that is possible). CEO Bobby Kotick said the following in a statement:
Our merger will benefit consumers and workers. It will enable competition rather than allow entrenched market leaders to continue to dominate our rapidly growing industry.
Bobby Kotick, Activision Blizzard CEO
The FTC, as you might guess, was less enthused. FTC spokesperson Douglas Farrar says they’re planning their next moves, giving the following statement:
We are disappointed in this outcome given the clear threat this merger poses to open competition in cloud gaming, subscription services, and consoles. In the coming days we’ll be announcing our next step to continue our fight to preserve competition and protect consumers.
Douglas Farrar
The merger is now allowed to move forward as planned, with one small catch; they need to settle things one way or another with the UK’s Competition and Markets Authority (CMA). The CMA previously blocked the merger from moving forward, primarily on concerns over the cloud gaming market*. Microsoft’s appeal to that decision will be heard by the board on June 28th.
*This seems, to me, to be the wrong thing to focus on, but what do I know?
Almost minutes after Judge Corley’s decision, both Microsoft and the CMA agreed to pause their battle to negotiate. While the UK’s Competition Appeal Tribunal (CAT) will need to approve this pause, it’s unlikely that they’ll turn it down.
The FTC has a chance to appeal Judge Corley’s decision ahead of 11:59PM PT on July 14th. That said, they didn’t bother doing so in the case of Meta acquiring Within, so it’s possible they’ll skip the appeal and focus on the antitrust suit.
Source: The Verge
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