The Federal Trade Commission this week filed a notice of appeal to the Ninth Circuit Court of Appeals in San Francisco after a federal judge denied its preliminary injunction against Microsoft Corp.’s acquisition of Activision Blizzard Inc.
A U.S. district court judge this week said in the ruling that the FTC failed to show that Microsoft would likely pull Call of Duty from the PlayStation or that an ownership of Activision content with substantially lessen competition in the video game library subscription and cloud gaming markets.
The FTC alleged harm to competitors and subscription services by allowing Microsoft to deny titles to rival hardware, manipulate Activision’s pricing, or change terms and timing to access to Activision’s content.
It citied Microsoft’s acquisition of ZeniMax in Mar. 2021 which allowed the company to secure exclusive release of new game Ips including Starfield and Redfall for Xbox.
The acquisition, which Microsoft expects to close in fiscal year 2023, would allow competitors access to the popular first-person shooter franchise. Microsoft has not yet hammered an agreement to release the franchise to Sony Corp.’s PlayStation consoles.
Microsoft in Jan. said it will acquire Activision Blizzard Inc. for $68.7 billion in an all-cash transaction.
The acquisition would propel Microsoft’s game business in console, PC, cloud, and mobile with franchises including Call of Duty, Warcraft, Diablo, Overwatch, and Candy Crush.
In addition, Microsoft plans to release Activision Blizzard titles to Xbox Game Pass, a monthly service that holds more than 25 million subscribers.
In Apr., the UK-based Competition and Markets Authority blocked Microsoft from acquiring Activision Blizzard.
The CMA cited harm to competition from the merger due to Microsoft’s dominant market position in the cloud gaming market, incentive to increase the cost of Xbox Game Pass, reduced innovation and less choice for UK gamers.
Following the ruling against the FTC, Microsoft and the CMA made a joint submission to the Competition Appeal Tribunal to a stay in litigation in order to address UK concerns for the pending acquisition.