Court Denies FTC’s Attempt to Block Microsoft’s Activision Blizzard Acquisition

In case there were any still wondering, Microsoft’s Activision Blizzard acquisition has been cleared by the court—despite the deal being complete for more than a year and a half.

Microsoft closed its acquisition of Activision Blizzard in mid-October 2023. The company worked hard to overcome regulatory objections on both sides of the Atlantic, ultimately winning approval from all but the Federal Trade Commission. The deal moved forward despite the FTC’s objections when the courts ruled in Microsoft’s favor, but that didn’t stop the FTC from appealing.

The FTC has lost its latest appeal, with an appeals court upholding the district judge’s previous denial of the FTC’s request to block the acquisition.

The panel affirmed the district court’s denial of a motion by the Federal Trade Commission (“FTC”) for preliminary injunctive relief against Microsoft’s acquisition of the video game developer Activision Blizzard, Inc.

We conclude that the district court applied the correct legal standards and that it did not abuse its discretion, or rely on clearly erroneous findings, in holding that the FTC had failed to make a sufficient evidentiary showing to establish the requisite likelihood of success on the merits of its § 7 claim. We therefore affirm.

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. 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.

Interestingly, the court did say the merger was still subject to “an administrative proceeding” before the FTC, but made clear that the agency had failed to make a compelling case.

The merger is the subject of an administrative proceeding that remains pending before the FTC. In its administrative complaint and in seeking a preliminary injunction in the district court, the FTC asserted that the merger would likely violate § 7 of the Clayton Act because, viewing the merger as a vertical integration between a content-platform operator and a content producer, competition would be substantially lessened in the relevant U.S.-based content-platform markets for gaming console devices, gaming subscription services, and gaming cloudstreaming services.

The panel held that the district court applied the correct legal standards and did not abuse its discretion, or rely on clearly erroneous findings, in holding that the FTC failed to make a sufficient evidentiary showing to establish the requisite likelihood of success on the merits of its § 7 claim. Thus, the FTC had not raised serious questions regarding whether the proposed merger was likely to substantially lessen competition in the relevant markets.

Ultimately, the ruling is a big win for Microsoft, a win that makes any further issues with the FTC unlikely—at least in the context of this acquisition.

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