U.S. FTC Withdraws Lawsuit Blocking Microsoft’s Buyout of Activision Blizzard

U.S. FTC Withdraws Lawsuit Blocking Microsoft’s Buyout of Activision Blizzard

The U.S. Federal Trade Commission (FTC) has withdrawn its lawsuit challenging to stop Xbox maker Microsoft from acquiring gaming developer Activision Blizzard, marking a major win for the tech giant.

The FTC said that it would halt the case and that the matter would no longer be submitted before the administrative judge as planned on 2 August. Though an option to reopen the case would remain.

With the administrative case now withdrawn, Microsoft and Activision have no legal barrier in the US to closing their deal. However, it is open for the FTC to still ask Microsoft for additional concessions in exchange for an agreement not to sue in Federal Court.

Microsoft and Activision had collectively filed a joint motion, urging the FTC to drop the case, after the regulator's legal campaign was significantly weakened by a US Appellate Court.

The Appellate Court had denied the agency’s request to pause the merger, technically clearing the way for the companies to close in the US. The FTC had appealed against that ruling.

Moreover, Microsoft has spent roughly 10 months negotiating with domestic and overseas antitrust regulators to calm fears that the tie-up would threaten competition in various gaming markets.

The company was originally set to finalize its purchase of the ‘Call of Duty’ maker on 18 July, but the regulatory actions in the UK and US slowed the ability to get the deal done.

Therefore, the last hurdle which remains for the companies to overcome is in the UK. After initially blocking the merger over concerns that Microsoft would gain too much market dominance in cloud gaming, the UK’s Competition and Markets Authority (CMA) agreed to reopen negotiations with the tech giant.

Accordingly, the London Court paused Microsoft’s appeal of the regulator’s initial decision.

One recent concession to regulatory concerns were that Microsoft had promised to make Activision’s widely popular ‘Call of Duty’ franchise available for 10 years to rival gaming console maker Sony, in addition to earlier agreements with Nvidia and Nintendo.

However, UK regulators were not satisfied with the earlier agreements to make the game available to Nintendo and Nvidia and therefore, Microsoft's concessions were insufficient. The regulator expressed worries that the merger would nonetheless give Microsoft too much dominance in cloud gaming.

On its part, the FTC had expressed that the acquisition could potentially harm the consumers not only in cloud gaming, but also gaming subscription services and gaming consoles.