Updated Jul 11, 2023, 4:09pm EDT
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What it means: Judge rejects FTC’s attempt to block Microsoft from buying Activision Blizzard

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The News

A federal judge rejected the Federal Trade Commission’s request to stop Microsoft from completing the $69 billion purchase of video game publisher Activision Blizzard.

The decision by Judge Jacqueline Scott Corley in San Francisco could mean that Microsoft would be able to acquire the developer of popular video games like “Call of Duty” and “World of Warcraft.”

“FTC has not shown a likelihood it will prevail on its claim this particular vertical merger in this specific industry may substantially lessen competition,” Corley wrote in her decision on Tuesday. “To the contrary, the record evidence points to more consumer access to Call of Duty and other Activision content,” she wrote.

The decision is a blow to the Biden administration’s efforts to curb Big Tech’s consolidation attempts.

We’ve rounded up reactions and insights on the court’s decision and what’s next for the deal.

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  • In response to the court’s decision, Phil Spencer, head of Xbox, said FTC’s claims about “console switching, multi-game subscription services, and cloud don’t reflect the realities of the gaming market,” and that the merger will only expand access to users all over the world.
  • While the FTC has until Friday night to decide whether to appeal the court’s decision, the focus is now on whether Microsoft will “try to work out some changes to its deal” to appease U.K. regulators, The Verge’s Tom Warren tweeted. He anticipated that things will go well for Microsoft.
  • While Wall Street believed the acquisition would be strongly challenged by U.K. regulators, at least one analyst predicted in May that the deal would close given approvals from China and Europe. “We view China’s unconditional endorsement as further evidence of the converging opinion of key global economies that this deal poses no threat to the consumer and therefore should move forward,” Macquarie analyst Sarah Hindlian-Bowler wrote. — Barron’s
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Know More

Microsoft has spent more than 18 months seeking approval from policymakers to secure the Activision deal, but critics were concerned that the tech giant would cut competitors out of certain games –– giving Microsoft an unfair advantage in the market.

An FTC spokesperson said the agency was disappointed by the decision and will announce its next steps in the upcoming days.

The ruling prompted U.K. regulators, who had previously rejected the deal, to pause their litigation efforts against the merger.

The U.K.‘s Competition and Markets Authority (CMA) said that it was ready to “consider any proposals” from Microsoft to restructure the transition in a way that would address their concerns and that “a stay of litigation in the UK would be in the public interest.”

Microsoft’s vice chair and president Brad Smith said Tuesday that the company was “committed to working creatively and collaboratively to address regulatory concerns.”