Microsoft secures victory in appellate court's review of the FTC's objection to the $69 billion acquisition of Activision Blizzard.
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In a recent win for tech behemoths, a federal appeals court struck down the Federal Trade Commission's (FTC) challenge to Microsoft's $69 billion acquisition of gaming powerhouse, Activision Blizzard.
The San Francisco-based 9th U.S. Circuit Court of Appeals upheld the lower judge's ruling which denied the FTC's request for a preliminary injunction to block the deal, allowing it to close in 2023.
The unanimous panel concluded that the lower judge had diligently applied the legal standards and that the FTC had negligible chances of succeeding with its claim that the merger would restrict competition.
The FTC refrained from comment, and Microsoft hadn't responded to a request for comment at the time of publish.
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Microsoft's legal triumph came following an antitrust lawsuit filed by the FTC against the tech juggernaut in 2022.
The FTC, entrusted with enforcing antitrust laws, simultaneously contested the merger via an internal administrative action. This ongoing proceeding was suspended in 2023 during President Joe Biden's administration, pending the 9th Circuit's decision.
The Activision Blizzard transaction marked a record-breaking acquisition in the video gaming market. It closed in late 2023 after receiving the green light from UK competition authorities and undergoing scrutiny in other international markets.
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The FTC's lawsuit aimed to freeze the Activision transaction while they pursued their administrative challenge.
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File Photo: The Microsoft logo is seen on a smartphone placed next to the Activision Blizzard logo in this illustration taken on January 18, 2022. REUTERS/Dado Ruvic/Illustration/File Photo (REUTERS/Dado Ruvic/Illustration/File Photo / Reuters Photos)
The agency alleged that the Microsoft-Activision tie-up would grant the merged entity the means to impede competitors in the console and subscription/cloud-gaming markets.
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In its appeal, the FTC contested that the court had applied an excessively stringent standard when weighing the potential for a preliminary injunction.
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Enrichment Data:The Bottom Line: The FTC's bid to block Microsoft's $69 billion acquisition of Activision Blizzard has been denied by the appeals court. On May 7, 2025, the U.S. 9th Circuit Court of Appeals unanimously rejected the FTC's appeal, upholding the initial 2023 ruling that allowed the acquisition to progress. The court determined that the FTC failed to present proof that the merger would harm competition in the gaming market, adhering to appropriate legal standards in their decision[2][3][4][5].
This ruling marks the end of the FTC's attempt to obstruct the deal via the courts, unless the FTC persuades the U.S. Supreme Court to overrule the appeals court decision or resumes its internal administrative proceedings, currently on hold following the appeals court's verdict[1][4]. However, with new FTC administration and evolving priorities, further legal action seems unlikely at present[4].
Implications for Competition in the Video Game Market:
- Microsoft now owns Activision Blizzard, bolstering its portfolio with prized gaming franchises such as Call of Duty, World of Warcraft, and Diablo.
- The acquisition enhances Microsoft's already dominant status in gaming, particularly cloud gaming, which is projected to account for 60-70% of the global market pre-deal[3].
- The FTC had expressed concerns that the acquisition could allow Microsoft to stifle competition by using exclusive content to advance its Xbox consoles and subscription/cloud services, potentially burdening rival platforms[3][4].
- The court, however, found little evidence to support these antitrust concerns, indicating minimal expected harm to competition as a result of the acquisition[4].
- Microsoft has made concessions to maintain a competitive landscape, possibly mitigating concerns about market dominance[3].
- Financially, Microsoft has profited from the acquisition, suggesting successful integration and monetization of Activision Blizzard's assets[4].
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In summary, the FTC's aim to bar Microsoft's acquisition of Activision Blizzard has been thwarted by the courts, enabling Microsoft to move forward with the deal. This bolsters Microsoft's influential presence in the gaming industry, although continued regulatory oversight and concessions from Microsoft aim to preserve competition in the ever-evolving gaming market[3][4].
- The merger between Microsoft and Activision Blizzard, a deal worth $69 billion, was allowed to proceed in 2023 following the San Francisco-based 9th U.S. Circuit Court of Appeals ruling that the Federal Trade Commission (FTC) had negligible chances of winning with their claim that the merger would restrict competition.
- In its appeal, the FTC contested that the court had applied an excessively stringent standard when weighing the potential for a preliminary injunction to block the Microsoft-Activision Blizzard merger.
- The Activision Blizzard transaction, marking a record-breaking acquisition in the video gaming market, closed in late 2023 undergoing scrutiny in other international markets besides the US.
- When trading markets, investors must consider the potential impact of mergers like Microsoft's acquisition of Activision Blizzard, as the consolidation of big tech behemoths can reconfigure the competitive landscape in technology-driven industries.
