
The US Federal Trade Commission (FTC) has officially terminated its legal challenge against Microsoft’s acquisition of video game holding company Activision Blizzard, worth $69bn. The decision to drop the case follows a recent dismissal of the FTC’s appeal for a preliminary injunction aimed at halting the deal.
“Today’s decision is a victory for players across the country and for common sense in Washington, D.C.,” posted Microsoft’s vice chair and president, Brad Smith, on social media platform X. “We are grateful to the FTC for today’s announcement.”
The FTC concluded that continuing its case against the already completed acquisition would not align with public interest objectives. The agency had filed an appeal to reverse a judge’s decision that declined to block the transaction. However, this appeal was unsuccessful, as an appeals court panel affirmed the denial of an injunction earlier this month. “The Commission has determined that the public interest is best served by dismissing the administrative litigation in this case,” said the FTC in its filing.
Typically, when contesting mergers, the FTC requests a temporary block to allow for further examination in its administrative court. Nonetheless, deals subjected to such blocks often end up being abandoned. Although the FTC did not achieve its goal of a temporary block in this instance, it could have pursued further legal action at a trial scheduled for July.
This transaction, which was announced in January 2022, marks the largest acquisition ever recorded in the video gaming sector. The FTC contended that this merger might enable Microsoft to fortify its position against competitors in areas like Xbox consoles and subscription-based and cloud gaming services. Despite these concerns, Microsoft successfully navigated its legal battle with the FTC in July 2023 and finalised the acquisition in October 2023.
The acquisition signifies more than just an immediate boost to Microsoft’s Xbox gaming division; it also demonstrates Microsoft’s strategic aspirations within the burgeoning metaverse environment. Valued at $95 per share, this deal surpasses previous Microsoft transactions, including its $26bn acquisition of LinkedIn in 2016, and even eclipses Dell’s $67bn EMC acquisition, which concluded the same year.
Activision Blizzard is renowned for publishing globally successful titles such as Call of Duty and World of Warcraft, alongside popular mobile games like Candy Crush. At the time of the announcement of the deal, Activision Blizzard’s games attracted a combined monthly active player base of 400 million users worldwide.
Regulatory scrutiny and international reception
The Microsoft-Activision Blizzard deal was examined by various international antitrust bodies. Early approvals came from entities such as the European Commission and China’s State Administration for Market Regulation (SAMR). However, both the FTC and the UK’s Competition and Markets Authority (CMA) had initially raised formal objections to the acquisition.
Additionally, Sony expressed apprehension over potential exclusivity issues concerning Call of Duty becoming available only on Xbox platforms. Microsoft addressed these concerns by committing to uphold non-exclusivity until 2033.