After winning the US lawsuit against the January deal, Microsoft says it will focus on resolving concerns in the UK. The tech giant’s merger with the owner of Call of Duty will be the biggest deal of its kind in gaming industry history.
Activision shares rose more than 10% as investors bet it would succeed. In the United States, regulators have argued that such a deal, valued at $69 billion (£56 billion) last year, would hurt gamers and reduce competition by giving Xbox maker Microsoft the power to deny rivals access branded games.
The Federal Trade Commission (FTC) sought an emergency blockade of the deal, which is expected to close later this month, while contesting the plans. But Judge Jacqueline Scott Corley said she didn’t think the regulator would win the case.
“The FTC has not demonstrated that it is likely to succeed in its assertion that the combined company is likely to pull Call of Duty from Sony PlayStation, or that its ownership of Activision content will substantially lessen competition in the video game and game library subscription markets. in the cloud”, wrote the judge in her decision.
The US win is the strongest indicator yet that the tech giant’s takeover will go ahead. This comes after the deal was approved by the European Union, while an offer to block the UK merger is currently under appeal.
Microsoft chairman Brad Smith said the company is “grateful” for the quick decision, and will now turn its focus to the UK. He and the UK’s Competition and Markets Authority agreed to put the litigation on hold while the company figured out a way to address the concerns, which centered on the cloud gaming market.
“We stand ready to consider any proposals from Microsoft to restructure the transaction in ways that address the concerns set forth in our final report,” a CMA spokesperson said.
The developments look set to deliver a big win for Microsoft, which is trying to keep up with market leaders PlayStation and Nintendo by investing heavily in games that can encourage gamers to choose their platforms, including the Xbox console, over their rivals.
Activision Blizzard is responsible for major titles including Call of Duty, World of Warcraft, Diablo and Overwatch, and also owns King, the mobile game developer behind Candy Crush.
The fate of the Call of Duty franchise was central to regulators’ arguments. Alongside regulators, PlayStation boss Jim Ryan said in a video deposition that Microsoft would likely restrict access to the series to PlayStation users, or offer them a downgraded version. However, Microsoft said it had offered Sony a ten-year licensing deal for the game and stated that it would not make financial sense to restrict access to so many followers.
“Our merger will benefit consumers and workers alike. It will allow competition, rather than allowing ingrained market leaders to continue to dominate our rapidly growing industry. We are optimistic that today’s decision signals a path to full regulatory approval in other parts of the world, and we stand ready to work with UK regulators to resolve any remaining concerns so that our merger can happen quickly.” , executive chairman of Activision Blizzard, following the ruling.
The decision is not necessarily the end of the process, and the FTC can still appeal. The regulator has also separately challenged the merger in a parallel proceeding, ongoing in the administrative court.
“We are disappointed with this result, given the clear threat this merger poses to open competition in cloud gaming, subscription services and consoles. In the coming days, we will announce the next step to continue our fight to preserve competition and protect consumers,” said FTC spokesman Douglas Farrar.
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