After FTC loses in court over Microsoft/Activision deal, UK’s CMA agrees to pause litigation to work out a deal

Kip Kniskern

Call of Duty: Vanguard video game on Xbox One and Xbox Series X

It’s been a good day today for Microsoft and its attempts to acquire Activision Blizzard. First, the US Federal Trade Commission (FTC) failed in its bid to force a preliminary injunction to try and stop the deal from going through while it prepared a case against it. The US District Court ruled that “(the) FTC has not shown it is likely to succeed on its assertion the combined firm will probably pull Call of Duty from Sony PlayStation, or that its ownership of Activision content will substantially lessen competition in the video game library subscription and cloud gaming markets.”

Although the FTC can still appeal, this ruling makes it less likely to do so. So it’s on to the UK and the Competition Market Authority, which blocked the deal, saying that it would cause “reduced innovation and less choice for UK gamers.”

Microsoft appealed the decision, but now, as announced by Microsoft President Brad Smith, Microsoft and the CMA have agreed to “pause litigation” as they work to hammer out a deal, presumably to save face for the CMA while reversing the decision:

The text of the statement reads:

“After today’s court decision in the U.S., our focus now turns back to the UK. While we ultimately disagree with the CMA’s concerns, we are considering how the transaction might be modified in order to address those concerns in a way that is acceptable to the CMA. In order to prioritize work on these proposals, Microsoft and Activision have agreed with the CMA that a stay of the litigation in the UK would be in the public interest and the parties have made a joint submission to the Competition Appeal Tribunal to this effect.”

In addition to Smith’s statement, head of Xbox Phil Spencer emailed employees about the court ruling and the CMA agreement, as reported by The Verge. Spencer told the Xbox employees that he and the Gaming Leadership team “believed that this acquisition will meaningfully benefit players and the gaming industry. Since we announced our intent, our actions have demonstrated our commitment to bringing more games to more people on more devices.”

While the jousting around this almost 70 billion dollar deal isn’t over, Microsoft is closer now to being able to close the deal and bring Call of Duty, World of Warcraft, a significant mobile portfolio led by King’s Candy Crush and a fresh infusion of talent in the gaming industry to Microsoft and Xbox. There’s now a much better chance that this deal will close on time, or close to it, and that Microsoft and Activision Blizzard King will soon put litigation behind them and move on to begin to compete more directly with Sony and Playstation.