An appeal from the Federal Trade Commission (FTC) to continue challenging Microsoft’s $69 billion acquisition of Activision Blizzard King (ABK) — the developer and publisher of numerous high-profile titles like Call of Duty and Diablo — for its Xbox gaming brand was denied by a federal appeals court on Wednesday morning.
It’s the latest development in the Xbox vs FTC saga that’s been ongoing since 2022, though Microsoft was able to formerly close the deal in late 2023 once a court ruled the regulator would not be granted a preliminary injunction to block the merger from happening while it pursued an internal challenge. The FTC vowed to continue challenging the deal right before it went through; this appeal, in which it was argued that the court’s requirements for an injunction were too strict, is representative of that effort.
The appeal was ultimately rejected in a 40-page ruling from the 9th U.S. Circuit Court of Appeals. You can read the full document in its entirety here, but the long and short of the court’s decision is that its panel found the original ruling was rooted in proper legal procedures and protocol, and that the FTC has little chance of succeeding in further efforts to prove the merger will hinder competition in the gaming market.
“Given the FTC’s failure to make an adequate showing as to its likelihood of success on the merits as to any of its theories, the district court properly denied the FTC’s motion for a preliminary injunction on that basis,” reads the final paragraph of the appeal denial. “We therefore do not address the district court’s alternative holding that, even if the FTC had made a sufficient showing, the balance of equities did not favor a preliminary injunction.”
In the first ruling made in July 2023, U.S. Judge Jacqueline Scott Corley rejected the original motion for an injunction, deciding that the FTC had failed to adequately prove Microsoft’s purchase of Activision Blizzard would restrict competition and give the Xbox publisher too much leverage over its rivals.
The $69 billion merger was — and still is — the largest acquisition that’s ever gone through in the gaming business, and faced intense legal scrutiny by regulators around the world for over a year and a half. First announced in early 2022, the deal was not able to close until October 2023 as a result.
A huge, and likely final, win for Microsoft
The chances of the FTC succeeding in this challenge against Judge Corley’s original ruling have always seemed pretty slim, and now that it’s been officially denied by this court of appeals, I’m all but certain its case against Microsoft is now dead in the water. With this huge win for the Redmond firm, it seems clear that the Xbox vs FTC battle is well and truly over.
With its end, Microsoft can now fully look to the future and continue its effort to bring substantial value to its customers on Xbox consoles and Windows PC systems with ABK’s assets. Thus far, we’ve already seen several Activision Blizzard games like Call of Duty, Diablo 4, and Overwatch 2 come to Xbox Game Pass, and ownership of King will also give Microsoft leverage to take advantage of when it eventually opens its delayed mobile game store. Of course, I also have no doubt that some future ABK games will be first-party Xbox and PC exclusives as well.
