Microsoft’s Activision Purchase Agreement May Continue, US Judge Says

WASHINGTON, July 11 (Reuters) – A U.S. judge ruled on Tuesday that Microsoft (MSFT.O), the maker of Xbox game consoles, can proceed with its plan to buy back the manufacturer. video game Activision Blizzard (ATVI.O) for $69 billion, a deal that deals a blow to President Joe Biden’s efforts to prevent a merger of the company that some say would hurt consumers.

Shortly after the judge’s ruling, the UK’s Competition and Markets Authority (CMA), which opposed the deal in April, said it was ready to consider Microsoft’s proposals to resolve the issues. antitrust concerns in the UK.

The deal will be the largest deal for Microsoft and the largest in the history of the video game business. Shares of Activision were up 11.3% at $92.01 Tuesday afternoon, and Microsoft shares were flat.

The Federal Trade Commission asked U.S. District Judge Jacqueline Scott Corley of San Francisco to stop the proposed settlement, arguing that it would give Microsoft exclusive access to Activision games, including » Call of Duty» best-selling. The agency’s concern is that the deal is likely to preclude the ability to offer those video games on other platforms.

In her opinion, Corley disagrees.

«The FTC has not shown it is capable of success in asserting that the combined company will likely pull Call of Duty from the Sony PlayStation or that its ownership of Activision content will significantly reduce competition in subscriptions.» video game library and cloud game marketplace.» she writes.

Corley’s decision is another setback in the Biden administration’s efforts to step up antitrust enforcement efforts.

The US court in San Francisco gave the FTC until Friday to appeal the judge’s decision.

FTC spokesman Douglas Farrar said the antitrust regulator was «disappointed with this outcome due to the obvious threat this merger poses of opening up competition in cloud gaming, subscription service and dashboard. In the coming days, we will announce our next step to continue our fight to stay competitive and protect consumers.”

Microsoft President Brad Smith said on Tuesday that the company was «grateful» for the «quick and thorough» decision. He also tweeted that his focus will now be on England. «While we ultimately disagree with the CMA’s concerns, we are looking at how the transaction could be modified to address those concerns in a manner acceptable to the CMA.»

RBC Capital Markets analyst Rishi Jaluria said the deal would make Microsoft the third-largest gaming company in the world, and «the market clearly wasn’t expecting that and that’s why Activision stock is now up 11 percent.» %.»

According to PwC estimates, the problem in the deal between Microsoft and Activision is its leadership position in the games market, whose revenue is expected to grow 36% over the next four years to $321 billion. While much of the testimony in the recent trial focused on «Call of Duty,» Activision produced other bestsellers such as «World of Warcraft,» «Diablo,» and the mobile game «Candy Crush Saga.»

The FTC has argued that Microsoft will be able to use Activision’s games to fail rival console makers such as Nintendo (7974.T) and market leader Sony Group (6758.T) .

The FTC’s complaint cited concerns about the loss of competitiveness in console gaming, as well as subscriptions and cloud gaming.

To address the agency’s concerns, Microsoft has agreed to license «Call of Duty» to rivals, including a 10-year contract with Nintendo (7974.T), subject to completion of the merger. During a five-day trial in June, Microsoft CEO Satya Nadella argued that the company would have no incentive to shut down Sony’s PlayStation (6758.T) or other competitors in order to sell more consoles. play more Microsoft Xbox games.

Reuters graphics

Reporting by Diane Bartz in Washington; Additional reporting by David Shepardson and Jaspreet Singh in Bengaluru Writing by Chris Sanders Editing by Caitlin Webber and Matthew Lewis

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