Once again, Microsoft triumphed in its legal battle against the Federal Trade Commission (FTC), as the 9th U.S. Circuit Court of Appeals unanimously rejected the agency’s appeal to block the tech giant’s $75 billion acquisition of Activision Blizzard. This ruling marks yet another setback for the FTC, which has been relentless in its attempts to prevent the merger, citing concerns over competition in the gaming industry.
The FTC initially sought to halt Microsoft’s acquisition, arguing that the merger would substantially lessen competition in key gaming markets, including console gaming, subscription services, and cloud gaming. The agency feared that Microsoft would use its newfound control over Activision Blizzard’s blockbuster franchises—such as Call of Duty—to disadvantage competitors like Sony.
However, the district court previously ruled against the FTC, stating that the agency had failed to provide sufficient evidence to support its claims. In response, the FTC appealed the decision, asserting that the lower court had applied an overly stringent standard when evaluating whether to grant a preliminary injunction.
The 9th Circuit Court of Appeals upheld the lower court’s ruling, stating that the FTC had not demonstrated a likelihood of success in proving that the merger would harm competition. The court emphasized that Microsoft had no incentive to make Call of Duty exclusive to Xbox or to release an inferior version on PlayStation.
“The FTC failed to sufficiently show that Microsoft would foreclose or partially foreclose rivals after the merger, either by making the popular game Call of Duty exclusive to its Xbox console or by releasing only an inferior version of the game for Sony’s rival PlayStation,” the ruling stated.
Additionally, the court found that Activision Blizzard had historically resisted putting its content on subscription services, meaning that Microsoft’s decision to include Activision titles in its Game Pass library would not substantially lessen competition.
“Because Activision Blizzard had long opposed putting its content on library subscription services, the merger’s effect of making such content available for the first time in the subscription market, even if exclusive to Microsoft, would not substantially lessen competition,” the court explained.
This ruling is a major blow to the FTC, which has struggled to challenge Big Tech acquisitions under Chair Lina Khan’s leadership. The agency’s repeated losses in court raise questions about its ability to regulate corporate mergers effectively.
For Microsoft, this victory solidifies its position as a dominant force in the gaming industry, allowing it to integrate Activision Blizzard’s portfolio into its ecosystem without further legal obstacles. The company has already committed to keeping Call of Duty on PlayStation for at least 10 years, a move that helped alleviate concerns from regulators in the UK and EU.
Moving forward, the FTC may reassess its approach to antitrust enforcement, particularly in the gaming sector. While the agency could continue its internal administrative proceedings, its chances of reversing the merger appear slim.
Microsoft’s win against the FTC underscores the changing landscape of antitrust regulation in the tech industry. As gaming continues to evolve, this merger could reshape the competitive dynamics between Xbox, PlayStation, and cloud gaming platforms. Whether the FTC will regroup and refine its strategy remains to be seen, but for now, Microsoft has emerged victorious in one of the most significant legal battles in gaming history.
