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Tuesday, March 5, 2024

US Court allows Microsoft to purchase Activision following FTC loss

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In a historic ruling, Microsoft Corp has been granted permission to complete its groundbreaking $69 billion acquisition of gaming giant Activision Blizzard Inc, after triumphing over the US Federal Trade Commission (FTC) in court. US Court allows Microsoft to purchase Activision following FTC loss.

In San Francisco, Judge Jacqueline Scott Corley ruled that Microsoft and Activision could merge ahead of the July 18 deadline. Notably, this comes despite the UK’s previous veto of the agreement back in May.

Microsoft has stated that the purchase of Activision is in part to bolster its footprint in the largely untapped mobile gaming market, with Activision being the owner of King, the creator of the well-known game Candy Crush.

Furthermore, the merger is expected to elevate Microsoft to the third spot among all video game companies worldwide, coming in after Sony Corp. and Chinese publisher Tencent Holdings Ltd., the creator of League of Legends.

News of the ruling caused a surge in Activision stock, with a notable rise of as much as 6%.

“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,” commented Microsoft President Brad Smith. “As we’ve demonstrated consistently throughout this process, we are committed to working creatively and collaboratively to address regulatory concerns”.

Despite the setback, the FTC remains vigilant. “We are disappointed in this outcome given the clear threat this merger poses to open competition in cloud gaming, subscription services, and consoles,” FTC spokesman Douglas Farrar said in an email. “In the coming days, we’ll be announcing our next step to continue our fight to preserve competition and protect consumers”.

FTC Chair Lina Khan has taken a strong stance on enforcing merger laws since her appointment by President Biden, and her recent lawsuit specifically targets tech platform mergers, such as the one between Lockheed Martin and Aerojet Rocketdyne Holdings.

Meanwhile, the UK Competition and Markets Authority (CMA) is reportedly open to reassessing Microsoft’s proposals and has agreed to a pause in the companies’ appeal before the Competition Appeal Tribunal.

This regulatory milestone propels Microsoft into the forefront of the gaming industry, allowing it to leverage Activision Blizzard’s successful franchises, like Call of Duty and Candy Crush. However, critics have raised concerns that Microsoft may disadvantage competitors by limiting access to blockbuster titles or publishing more games exclusively for Xbox and PC.

The story is yet to fully unfold as the world awaits further developments from the UK and possible next steps from the FTC. The landmark merger and its repercussions on the gaming and tech industry are sure to be closely watched in the coming weeks.

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