The Federal Trade Commission (FTC) of the United States has lost its appeal against the acquisition of $ 68.7 billion in Microsoft from the video game publisher Activision Blizzard, a major blow to the agency’s efforts to limit the power of Big Tech through the antitrust application.
In a decision published this week, a jury of the Ninth Court of Appeal of the United States confirmed a previous refusal of a lower court of a preliminary injunction which would have interrupted the agreement.
The court concluded that “given the failure of the FTC to make an adequate demonstration as to its probability of success on the substance of one of its theories, the district court properly denied the request of the FTC for a preliminary injunction on this basis”, according to the opinion quoted by Reuters.
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The decision confirms the decision of the American district judge Jacqueline Scott Corley in July 2023, who rejected the FTC’s attempt to block the merger on the grounds that the agency has not demonstrated that the acquisition would considerably decrease competition on the game market. The next day, the FTC appealed the decision, but Microsoft and Activision concluded the agreement in October 2023, almost two years after the merger was announced.
For the first time, the FTC continued to block the acquisition in December 2022, arguing that Microsoft’s control of activation game content could give it the capacity and incentive to “retain or degrade Activision content in a way that considerably reduces competition – including competition on product quality, price and innovation”.
At the heart of the FTC challenge, Microsoft could make Activision successful titles, such as Call of Duty, exclusive to its own platforms or otherwise rival consoles and cloud game services. But the district court, and now the Court of Appeal, have found that proof of the FTC was missing.
According to the summary of the Court of Appeal, the FTC did not show that Microsoft would probably seize the competitors in a way that would harm consumers. The panel did not find an adequate support for the theory that Microsoft’s property in Activision would reduce competition on the game console market, game -based game services or emerging cloud game platforms.
Although the acquisition has now crossed American courts and a regulatory examination in the United Kingdom, after Microsoft made dealerships to transfer the Dold streaming rights to Ubisoft, the FTC administrative case against the merger remains technically underway.
“The agreement is always the subject of an administrative procedure which remains pending before the FTC,” noted the opinion on appeal.
However, the agreement now concluded and two court decisions against his request interrupt, the FTC options seem increasingly limited.
The decision underlines the difficult battle that the FTC is confronted under the leaders of President Lina Khan while she seeks to challenge dominant technological companies thanks to the more aggressive antitrust application. The Microsoft-Activision affair joins other recent cases in which the agency has struggled to convince the courts to stop major technological acquisitions.
Despite this setback, Khan defended the posture of the agency, arguing that challenges are necessary even when success is uncertain, to guarantee regulatory monitoring which maintains the rate of industry consolidation. However, legal observers have stressed that repeated FTC losses in court can weaken its ability to influence future technological mergers.
The Microsoft – Activision merger remains the most important in the history of the game industry. Microsoft has declared that the acquisition will help it accelerate its cloud game strategy and widen access to Activision titles. The company has committed to keeping Call of Duty available on rival platforms for at least ten years as part of the agreements with competitors like Sony and Nintendo.
Microsoft did not make a new comment after the last decision. The FTC also did not declare to continue its administrative dispute or accept the judgment of the court.
