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The FTC Appeals Court Decision Allowing Microsoft to Purchase Activision Blizzard

The Federal Trade Commission (FTC) is appealing a recent US federal court order that cleared the way for Microsoft to acquire Activision Blizzard. The FTC filed a notice of appeal but has not yet released its arguments. This appeal will be submitted to the Ninth Circuit Court of Appeals.

The FTC’s request for a preliminary injunction to block Microsoft’s acquisition of Activision Blizzard was denied by Judge Jacqueline Scott Corley earlier this week. The judge stated that there was no evidence to support the FTC’s claim that the merger would substantially lessen competition. Instead, the ruling indicated that the merger could provide consumers with greater access to Activision content, including popular games like “Call of Duty.”

If the preliminary injunction had been granted, Microsoft would have been temporarily prevented from completing the deal until the outcome of the FTC’s administrative case. The administrative case is scheduled to begin on August 2nd.

The FTC’s decision to appeal means that the regulator now seeks an emergency stay from the Ninth Circuit Court of Appeals to extend the existing temporary restraining order (TRO) beyond its expiration on July 14th. However, it is uncertain if the appeals court will issue a ruling before the deal deadline of July 18th, which may allow Microsoft to proceed with the acquisition without a restraining order in place.

Activision Blizzard’s Chief Compliance Officer and EVP of Corporate Affairs, Lulu Cheng Meservey, expressed confidence that the merger would proceed in the US. However, the appeal adds a layer of uncertainty to the outcome of the acquisition.

Meanwhile, Microsoft must also address concerns raised by the UK’s Competition and Markets Authority (CMA) before finalizing the deal. The CMA previously blocked the acquisition due to cloud gaming concerns, leading to negotiations between Microsoft and the regulatory authority. The CMA warned that changes to the deal could trigger a new merger investigation, and discussions between Microsoft and the CMA are still in early stages.

According to reports, Microsoft and the CMA have discussed a potential divestiture to address cloud gaming concerns. However, the specifics of this divestiture have not been confirmed. Any divestiture would likely be specific to the UK market and could involve modifications to Microsoft’s Xbox Cloud Gaming services in that region.

The deal has also received approval from EU regulators, thanks to licensing agreements offered by Microsoft to cloud gaming competitors. However, the CMA cautions that Microsoft will not have the opportunity to propose additional remedies once the final report is issued.

In the UK and the US, the outcome of the deal now rests with the Ninth Circuit Court of Appeals and the discussions between Microsoft and the CMA, respectively.

AI Legalese Decoder can assist in analyzing and interpreting the complex legal language and proceedings surrounding the FTC’s appeal and the ongoing negotiations between Microsoft and the CMA. It can provide valuable insights and summaries of key arguments, helping legal professionals and researchers navigate these developments more efficiently.

Update July 12th, 8:06PM ET: Added tweets from Activision Blizzard execs.

Correction July 12th, 7:33PM ET: Based on a CNBC report, this article originally stated Microsoft and the CMA may have agreed to a ÔÇ£small divestiture.ÔÇØ CNBC has corrected its article, and now says that Microsoft offered the divestiture without saying the change has been accepted.

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