Microsoft’s $69 billion deal with Activision wins approval from US judge, UK eases opposition

Diane Bartz

WASHINGTON (Reuters) – Microsoft cleared major hurdles to its plan to acquire video game maker Activision Blizzard on Tuesday after a U.S. judge gave approval to a $69 billion deal and a British regulator suggested it might reconsider your objection.

Activision shares rose 10% that day as the United States and the United Kingdom were the two countries opposed to Microsoft’s largest-ever deal and the largest deal in the history of the video game industry. Microsoft shares rose 64 cents to $332.47.

U.S. District Judge Jacqueline Scott Corley in San Francisco rejected the Biden administration’s claim that the deal would harm consumers by giving Xbox game console maker Microsoft exclusive access to games including the best-selling “Call of Duty.”

Shortly after the US judge’s ruling, the UK’s Competition and Markets Authority (CMA) said it was ready to consider Microsoft’s proposals to address antitrust issues in the UK, suggesting the two sides could reach an agreement.

“The various testimonies that came to light during the US trial weaken the British antitrust authority’s arguments,” said Joost Van Dreunen, a lecturer at New York University’s Stern School of Business.

The US Federal Trade Commission (FTC) argued that Microsoft would be able to use Activision games to leave rival console makers such as Nintendo and market leader Sony Group out in the cold.

Corley disagreed with her opinion.

“The FTC has not demonstrated that it has a good chance of success in asserting that the combined company is likely to withdraw Call of Duty from Sony PlayStation or that its ownership of Activision content will significantly reduce competition in the video game library and cloud gaming subscription markets,” he added. She wrote.

The court gave the FTC until Friday to appeal the decision.

FTC spokesman Douglas Farrar said the antitrust watchdog was “disappointed with this outcome given the clear threat this merger poses to open competition in cloud gaming, subscription services and consoles. We will announce our next step in the coming days to continue our fight to preserve competition and protect consumers.”

According to a person familiar with the matter, he is considering filing an appeal against the court’s decision.

The FTC did not immediately respond to a request for comment asking about its plan to appeal the ruling.

Great Britain’s decision in the spotlight

According to PwC estimates, sales in the gaming market are expected to increase by 36% over the next four years to $321 billion.

Corley’s decision represents a setback in the Biden administration’s broader effort to lower costs for consumers, which also included negotiations to lower the cost of insulin drugs and eliminate “junk fees” on airline tickets.

Microsoft CEO Brad Smith said the company was grateful for the “quick and thorough” decision. He also tweeted that he would now focus on considering how the deal could be amended to address the CMA’s concerns.

“It looks like Microsoft and CMA could reach an agreement in the next few weeks,” said DA Davidson & Co analyst Franco Granda.

While much of the testimony in the recent trial focused on “Call of Duty,” Activision produces other bestsellers such as “World of Warcraft,” “Diablo” and the mobile game “Candy Crush Saga.”

The FTC’s complaint cited concerns about loss of competition in the console gaming industry, as well as subscription and cloud gaming.

To allay the agency’s concerns, Microsoft agreed to license “Call of Duty” to competitors, including a 10-year contract with Nintendo, provided the merger closes.

During a five-day trial in June, Microsoft CEO Satya Nadella argued that the company would have no incentive to distance itself from Sony PlayStation or other competitors in order to sell more Microsoft Xbox consoles.

(Reporting by Diane Bartz in Washington; Additional reporting by David Shepardson in Washington and Jaspreet Singh and Aditya Soni and Shivani Tanna in Bengaluru; Writing by Chris Sanders; Editing by Caitlin Webber, Matthew Lewis David Gregorio and Muralikumar Anantharaman)