An appeals court rejects the FTC’s attempt to pause Microsoft’s purchase of Activision

An appeals court rejects the FTC’s attempt to pause Microsoft’s purchase of Activision

A federal appeals court has denied the Federal Trade Commission’s request to temporarily stop Microsoft (MSFT) from finalizing its acquisition of video game maker Activision Blizzard (ATVI), removing one of the final hurdles to closing a $69 billion deal.

He upholds the decision by a three-judge panel of the Ninth Circuit Court of Appeals a to rule by a California federal district court judge on Tuesday saying he would not prevent the deal from moving forward while a separate antitrust challenge by the Federal Trade Commission is being held in court.

The deal has yet to get approval from UK regulators. agency, the Competition and Markets Authority (CMA), on Tuesday paused Its legal action to block the acquisition in favor of renewed negotiations with Microsoft. Microsoft agreed to pay Activision a $3 billion breakup fee if the link fails by that date.

“We appreciate the quick response of the Ninth Circuit that rejected the FTC’s motion to further delay the Activision deal,” said Microsoft President and Vice President Brad Smith. wrote on Twitter. “This brings us one step closer to the finish line in this marathon of global regulatory reviews.”

Legal experts see the ruling as a win for Microsoft, though the primary lawsuit filed by the FTC alleging the deal would hurt competition is still pending.

They believe it costs Microsoft to keep the deal afloat while waiting for an outcome FTC lawsuit It may reach a tipping point, given that the agency has no deadline for resolving its case.

FTC first File an appeal To prevent the merger in December. Her lawsuit filed with the agency Inner Courtclaims that the combination of the two companies will limit competition in three markets: game consoles, subscription content, and cloud gaming.

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The acquisition, if closed, would be the largest in Microsoft’s history and the largest in the gaming industry.

Microsoft, which owns the Xbox game console, controlled 16% of the game console market in 2021. Since 2021, its share of game console sales has risen to 21%, Microsoft said in court documents, although it remained in third place after PlayStation (SONY) and Nintendo (NTDOY).

Key to the Microsoft-Activision deal is the “Call of Duty” video game franchise.. (AP Foto/Peter Morgan, File)

The wrench is Activision Blizzard’s earnings.Call of dutyA franchise. Activision Blizzard’s game series makes billions every year, with the latest release, 2022’s “Call of Duty: Modern Warfare II,” bringing in $1 billion in sales in its first 10 days on the market.

Adding other Call of Duty and Activision game franchises to Microsoft’s existing first-party titles including “Halo” and “Forza” will see Microsoft overtake Nintendo (NTDOY) to make the company the second largest maker of home consoles. Through the revenue behind Sony (SONY). It would also put Microsoft behind Tencent and Sony as the third largest game company by global revenue.

Global regulators including those in the European Union, Brazil, China, Japan and South Korea have already approved the deal.

The UK’s CMA expressed concerns that the deal could make Microsoft too dominant in cloud gaming, which could lead to “less innovation and fewer options for UK gamers over the coming years”.

To allay regulators’ concerns that Microsoft might abuse the deal to distance its flagship “Call of Duty” game from its competitors, the company has signed agreements with Switch console owner Nintendo and Nvidia, promising to keep the game available on competing platforms. for at least 10 years.

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The FTC did not immediately respond to Yahoo Finance’s request for comment on the appeals court’s decision.

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