FTC Microsoft Activision Appeal Crumbles in Court

The Federal Trade Commission (FTC) has lost its appeal to block Microsoft’s $68.7 billion acquisition of gaming powerhouse Activision Blizzard, dealing another blow to the Biden administration’s aggressive regulatory stance against Big Tech mergers.

An appeals court panel upheld a lower court’s 2023 ruling denying the FTC’s request for a preliminary injunction. The panel concluded the agency failed to prove that Microsoft’s acquisition would substantially harm market competition. “The district court properly denied the FTC’s motion,” the court stated, emphasizing the agency’s weak case on the merits.

The FTC originally filed suit in 2022, claiming that Microsoft’s control over blockbuster franchises like Call of Duty, World of Warcraft, and Candy Crush would give it the power to undermine rivals by restricting content access or degrading quality. A district judge rejected those arguments, allowing the acquisition to close in October 2023.

Despite the appeals court decision, the merger is still subject to an internal administrative proceeding at the FTC, though those rarely overturn completed deals of this scale. Both Microsoft and the FTC declined public comment following the ruling.

The deal, first announced in 2021, marks one of the largest tech acquisitions in history and has reshaped the gaming industry. Microsoft now controls a sweeping portfolio of high-profile game titles and studios, enhancing the Xbox brand’s competitive edge against rivals like Sony’s PlayStation.

The FTC’s legal challenge is part of a broader crackdown on tech industry consolidation, championed by FTC Chair Lina Khan. However, this latest court loss highlights the agency’s difficulty in convincing judges that vertical mergers like Microsoft-Activision substantially harm consumer choice or innovation.

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