FTC says it will appeal to block Microsoft-Activision deal

Satya Nadella, CEO, Microsoft, at the Allen & Company Sun Valley Conference on July 11, 2023 in Sun Valley, Idaho.

David A. Grogan | CNBC

The Federal Trade Commission is not giving up on its bid to prevent Microsoft from closing its $68.7 billion acquisition of game publisher Activision Blizzard. On Wednesday, the agency filed to appeal a federal judge’s decision to deny a request for a preliminary injunction that would have prevented the deal from closing.

The decision comes one day after Judge Jacqueline Scott Corley, at the U.S. District Court for the Northern District of California, ruled in favor of the two companies.

The FTC first sued to block the acquisition last December, then filed for an emergency injunction last month ahead of the deal’s July 18 deadline. The FTC has argued that the deal was anticompetitive because Microsoft might make some of its games exclusive to its own game consoles or diminish the experience of Activision games on rival services should the deal close. Microsoft has said it would instead make the games more widely available.

Corley ruled that the FTC had not shown it was likely to prevail in its administrative challenge of the merger in its internal proceeding.

CNBC reported earlier on Wednesday that FTC could bring the judge’s decision to the 9th Circuit appeals court.

On Wednesday Activision Blizzard CEO Bobby Kotick told CNBC’s Julia Boorstin, “I’d be surprised if they would waste taxpayer resources on something like that,” referring to an FTC appeal. Kotick said he didn’t think the appellate court would grant a stay.

The FTC declined to comment on its legal response to the judge’s decision.

“The District Court’s ruling makes crystal clear that this acquisition is good for both competition and consumers,” Brad Smith, Microsoft’s president and vice chair, said in a statement. “We’re disappointed that the FTC is continuing to pursue what has become a demonstrably weak case, and we will oppose further efforts to delay the ability to move forward.”

The software maker is also busy trying to secure approval for the deal in the United Kingdom. Microsoft executive Brad Smith said the company and Activision Blizzard have agreed with the country’s Competition and Markets Authority that a stay of litigation would be beneficial.

“The facts haven’t changed. We’re confident the U.S. will remain among the 39 countries where the merger can close,” an Activision Blizzard spokesperson wrote in an email. “We look forward to reinforcing the strength of our case in court, again.”

WATCH: Activision CEO Bobby Kotick: Would be surprised if the FTC wastes taxpayer money on appeal

Activision CEO Bobby Kotick: Would be surprised if the FTC wastes taxpayer money on appeal

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