**Federal Judge Allows Microsoft’s Takeover of Activision Blizzard**
In a major win for Microsoft, a federal judge has declined to block the tech giant’s $69 billion takeover of video game company Activision Blizzard. The ruling comes after regulators sought to ax the deal, fearing it would harm competition. The judge, U.S. District Judge Jacqueline Scott Corley, acknowledged the significance of the merger and the need for scrutiny but ultimately concluded that it would not cause serious harm. The Federal Trade Commission (FTC) failed to demonstrate how the merger would substantially lessen competition in the video game console market or in the rapidly growing markets for monthly game subscriptions and cloud-based gaming, according to Corley’s ruling.
**Microsoft’s Victory in Court Hearing**
Microsoft’s victory in court was not unexpected, as the company’s lawyers had the upper hand during the 5-day San Francisco court hearing that took place last month. The hearing featured testimony from Microsoft CEO Satya Nadella and longtime Activision Blizzard CEO Bobby Kotick, both of whom reassured the court that Activision’s highly popular game Call of Duty would continue to be available on rival platforms such as Sony’s PlayStation. In a statement, Kotick expressed confidence that the merger would benefit consumers by promoting competition and preventing market domination by entrenched leaders.
**FTC’s Attempt to Delay the Deal**
The FTC had requested Judge Corley to issue an injunction temporarily blocking Microsoft and Activision from closing the deal before an in-house judge could review it in an August trial. Microsoft and Activision opposed the delay, arguing that it would force them to abandon the agreement they had signed almost 18 months earlier. To ensure the deal’s completion by the deadline, Microsoft agreed to pay a $3 billion breakup fee to Activision if it fails to close by July 18. The FTC has not yet indicated whether it plans to appeal the ruling.
**Setback for the FTC and Chairperson Lina Khan**
The ruling represents a setback for the FTC’s intensified scrutiny of the technology industry under the leadership of Chairperson Lina Khan. Khan, who was appointed by President Joe Biden due to her strong stance against monopolistic behavior by tech giants like Amazon, Google, and Meta (formerly Facebook), has faced challenges in enforcing antitrust laws. Another judge rejected the FTC’s attempt earlier this year to block Meta’s acquisition of virtual reality fitness company Within Unlimited. On Thursday, Khan is expected to face tough questioning from Republican lawmakers in a House hearing concerning the commission’s enforcement actions and her management of the agency staff.
**Judge Corley’s Skepticism and Ruling**
Judge Corley, also a Biden nominee, expressed skepticism about the FTC’s case during the proceedings, particularly regarding the hypothetical harms that could arise if Microsoft were to remove Call of Duty from rival platforms or provide an inferior experience on competing consoles. Her ruling highlighted the FTC’s failure to present a strong case that Microsoft would likely exclude Call of Duty from Sony’s PlayStation. In response to concerns about potential market foreclosure, Microsoft committed to making Call of Duty available on various platforms, including Nintendo’s Switch console and Nvidia’s cloud gaming service, for at least the next decade. According to Corley, this commitment demonstrates that the scrutiny placed on the merger has been effective.
**Continued Challenges and Potential Resolution**
Although the ruling removes the greatest obstacle to the merger, other countries and the European Union have approved the takeover, while the U.K.’s Competition and Markets Authority (CMA) remains opposed. Microsoft and the CMA have jointly applied to suspend a tribunal hearing scheduled for later this month to find a resolution that addresses the CMA’s concerns. Microsoft President Brad Smith stated that the company is willing to modify the transaction to satisfy the CMA, despite disagreeing with the agency’s worries. Canadian regulators are also investigating the acquisition and have expressed concerns similar to those raised by the FTC.
**Calls for Further Action**
Advocates for stronger antitrust enforcement in the U.S. are urging the FTC to seek an emergency stay of Judge Corley’s decision from an appeals court to proceed with a trial. Some have raised concerns about a potential conflict of interest involving Judge Corley’s son, who works for Microsoft. Judge Corley disclosed the relationship in court, but critics argue that it may have influenced the outcome.
**Conclusion**
Despite the FTC’s efforts to block the merger, a federal judge has allowed Microsoft to proceed with its takeover of Activision Blizzard. The ruling is a significant victory for Microsoft, as it paves the way for one of the largest tech industry mergers in history. However, the deal still faces opposition from the U.K.’s CMA, and Canadian regulators express concerns about potential anti-competitive effects. As the merger progresses, it remains to be seen how these challenges will be resolved.
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