Update: FTC Loses Appeal In Case Against Microsoft's Activision Blizzard Acquisition

Update, 7/17/23:

The U.S. Appeals Court for the Ninth Circuit has denied the Federal Trade Commission's appeal of a recent ruling in the regulator's case against Microsoft's acquisition of Activision Blizzard. 

Last week, California Judge Jacqueline Scott Corley denied the FTC's request for a preliminary injunction in its case to block Microsoft and Xbox from acquiring the Call of Duty maker. The FTC sought this preliminary injunction to have the court order the tech giant to cease its attempt at acquiring Activision Blizzard for a colossal $69 billion. Following the court ruling, the FTC had until July 14 to file an appeal and it did so on July 12. Judge Corley quickly denied this appeal, as expected, and now, the U.S. Court of Appeals for the Ninth Circuit has also denied it, in a massive win for Microsoft. 

Microsoft vice chair and president Brad Smith tweeted Friday, "We appreciate the Ninth Circuit's swift response denying the FTC's motion to further delay the Activision deal. This brings us another step closer to the finish line in this marathon of global regulatory reviews." 

With the FTC's appeal denied, Microsoft is all clear in the U.S. to complete its purchase of Activision Blizzard. However, the company must still contend with the Competition and Markets Authority in the U.K., which, in April, blocked this acquisition over cloud gaming concerns. However, after Judge Corley's ruling early last week, Microsoft announced it was pausing its appeal motions in the U.K. to instead attempt to negotiate something satisfactory for both it and the U.K. regulatory agency. 

Late last week, the CMA announced it had extended its own deadline in Microsoft's Activision Blizzard case to give it time to deliver a potentially new ruling in the case. Its original deadline was July 18; the new one is August 29, 2023. 

All signs point to Microsoft closing the purchase by its own July 18 deadline (note: this deadline is separate from the CMA's original July 18 deadline); however, that leaves the question of the U.K. If it closes July 18 without an updated ruling from the regulatory agency (presumably in Microsoft's favor), Microsoft likely needs to carve the U.K. out of the deal or assume that later down the road, before August 29, the two parties will reach a satisfying agreement.

The original story continues below...

Original story, 7/13/23:

The Federal Trade Commission has filed an appeal to a California judge’s ruling earlier this week in its Activision Blizzard acquisition court case against Microsoft. 

Earlier this week, California Judge Jacqueline Scott Corley denied the FTC’s request for a preliminary injunction in its case to block Microsoft and Xbox from acquiring the Call of Duty maker. The FTC sought this preliminary injunction to have the court order Microsoft to cease its attempt at acquiring Activision Blizzard for a colossal $69 billion. Following the court ruling, the FTC had until July 14 to file an appeal, and it did so on July 12. 

Here’s what the FTC’s appeal filing says: 

“Notice is hereby given that Plaintiff Federal Trade Commission (“FTC”) appeals to the United States Court of Appeals for the Ninth Circuit from this Court’s Opinion dated July 10, 2023 and entered on the Court’s docket on July 11, 2023 at ECF Docket Number 305 denying the FTC’s request for a preliminary injunction pursuant to Federal Trade Commission Act § 13(b), 15 U.S.C. 53(b)”

Microsoft vice chair and president Brad Smith released the following statement on Twitter regarding the filing of the appeal: 

Activision Blizzard CCO Lulu Cheng Meservey tweeted in response to this appeal filing, “The facts haven’t changed. We’re confident the U.S. will remain among the 39 countries where the merger can close. We look forward to demonstrating the strength of our case in court – again.” 

Judge Corley wrote in their ruling that, “After considering the parties’ voluminous pre-and-post hearing writing submissions, and having held a five-day evidentiary hearing, the court DENIES the motion for preliminary injunction.” They write that the FTC did not show “it is likely to succeed on its assertion the combined firm will probably pull Call of Duty from Sony PlayStation" or “that its ownership of Activision content will substantially lessen competition in the video game library subscription and cloud gaming markets.” 

Judge Corley’s ruling contrasts the finding of the U.K.’s Competition and Markets Authority, which blocked Microsoft’s proposed acquisition of Activision Blizzard due to concerns over the cloud gaming market. However, shortly after Judge Corley’s ruling, Microsoft announced it was pausing appeal efforts against the U.K. regulator to negotiate something satisfying both parties. 

Interestingly, Microsoft has until July 18 to close this deal. But with this appeal filed, it’s unclear if that deadline will be affected. It’s possible the courts respond to the appeal before the July 18 deadline in the form of an emergency stay that extends the temporary restraining order currently in place – it expires Friday, July 14 – but that’s not guaranteed, as noted by The Verge. If that doesn’t happen, Microsoft can theoretically close before July 18, but there’s still the issue of the CMA in the U.K. 

The Verge reporter Tom Warren tweeted that NASDAQ (New York City stock exchange) has announced that Activision Blizzard will be removed from the market before the market opens on Monday, July 17, seemingly alluding to Microsoft closing the deal before then or shortly after. Only time will tell. 

For more, read our full write-up on the court’s ruling in the case between the FTC and Microsoft, and then read more about the move to negotiate new terms between Microsoft and the CMA. 

Game Informer has reached out to Activision Blizzard, Microsoft, and the FTC for a statement or comment regarding the appeal filing and will update the story accordingly if comment or a statement is received. 

Do you think the FTC will win its appeal against the court’s ruling? Let us know in the comments below!