FTC appeals court decision regarding Microsoft’s Activision Blizzard acquisition

Time’s running short, though

A Californian court rejected the Federal Trade Commission’s (FTC) request for a preliminary injunction against Microsoft’s acquisition of Activision Blizzard earlier this week, enabling the companies to close the deal as early as July 14, 2023, if they wish.

The FTC’s lawyers failed to present convincing arguments in court that the takeover may harm competition with the judge even having to remind them that they’re in the courtroom to defend the interests of consumers, not Microsoft’s rival Sony. Despite this suboptimal performance during the trial, the FTC has appealed the court’s decision in a final attempt to stop the deal.

Time is running short, however. Microsoft and Activision Blizzard have an agreement that runs until July 18, 2023, after which the parties could walk away from the acquisition, so it’s likely that everyone on that side would like to have things wrapped up by then. They could also agree on an extension of the closing agreement.

Microsoft’s success at court also led to progress on the UK front, where the Competition and Market Authority (CMA) initially denied giving approval of the takeover. Seeing its isolated position, however, the CMA called a truce with Microsoft and came to the negotiating table with some sort of compromise seeming likely.

In reaction to the appeal, Microsoft’s president Brad Smith stated: “We’re disappointed that the FTC is continuing to pursue what has become a demonstrably weak case, and we will oppose further efforts to delay the ability to move forward.”

Yesterday the Court ruled our acquisition of Activision Blizzard should proceed, and we oppose any further delay. Our statement on the FTC's decision to appeal: pic.twitter.com/EhdO4OHX9g

— Brad Smith (@BradSmi) July 13, 2023

The chances of the appeal being successful are highly in doubt, according to Reuters. While legal opinion is a bit divided on the exact standard the judge applied in this case, the ruling is pretty watertight overall and the FTC historically hasn’t been appealing merger decisions very often for good reason.