The FTC is appealing the ruling that allowed Microsoft to buy Activision Blizzard

The Federal Trade Commission (FTC) says it is appealing a recent US federal court order that cleared the way for Microsoft to buy Activision Blizzard. The FTC has filed a notice that it is appealing Judge Jacqueline Scott Corley’s decision, but we won’t know the regulator’s arguments until the full appeal is submitted to the Second Circuit Court of Appeals. ripe.

Microsoft won an uphill battle with the FTC earlier this week, when a federal judge denied a request for a preliminary injunction from the US regulator. Judge Corley wrote in the ruling: “The Court finds that the FTC has not shown it is likely to prevail in its claim that this particular vertical consolidation in this particular industry could substantially reduce it. competition,” Judge Corley wrote in the ruling. “In contrast, record evidence indicates that consumers have greater access to call of duty and other Activision content.”

If a preliminary order is granted, it will temporarily prevent Microsoft from closing its agreement with Activision Blizzard until the outcome of the FTC’s own administrative lawsuit against the company. That separate legal challenge will still begin on August 2.

Now that the FTC is choosing to appeal Judge Corley’s decision, the regulator needs the Ninth Circuit Court of Appeals to issue an urgent adjournment to extend the current temporary restraining order (TRO) which will expire at 11:59 p.m. PT on Friday, July 14. It’s unclear whether the appeals court will rule ahead of the July 18 settlement deadline, potentially leaving Microsoft to close its deal with Activision Blizzard on Monday or Tuesday without a ban.

“Truth does not change,” tweeted Lulu Cheng Meservey, Activision Blizzard’s CCO and EVP on corporate matters. “We believe the United States will remain among the 39 countries where the merger could end. We look forward to strengthening our case in court – again.

Mike Ybarra, president of Blizzard Entertainment, quipped about the appeal on Twitter. “Your Taxes at Work,” ybarra said.

Microsoft still needs to resolve the UK’s Competition and Markets Authority (CMA) issues with the acquisition before it can close, after the regulator blocked the deal over cloud concerns. at the beginning of this year. Both Microsoft and the CMA almost immediately announced that they had agreed to pause legal battles for negotiations following Judge Corley’s ruling on Tuesday.

In a surprise statement on Wednesday, the CMA later warned Microsoft’s chance to restructure the deal could «lead to a new merger investigation» and that negotiations between the regulator and Microsoft is still in the «early stage».

A report from CNBC initially claimed Microsoft and the CMA had agreed on a «small divestment» to address cloud gaming concerns, but was later corrected to clarify that Microsoft only offer «a small and discrete divestment» that the CMA does not necessarily accept. CNBC did not expand on what the divestment might involve, but such a scenario would be specific to the UK and could involve changes to Microsoft’s Xbox Cloud Gaming services in the area.

EU regulators also have concerns about cloud gaming but approved the deal earlier this year thanks to 10-year licensing agreements that Microsoft has offered to rivals playing cloud gaming. cloud. The CMA also warned that Microsoft had no «opportunity to issue new remedies» after the final report was released.

Microsoft’s deal with the EU includes a key remedy related to free licenses for consumers in EU countries that allow them to stream via «any cloud game streaming service». whatever they choose” all the current and future Activision Blizzard console and PC games they have. license for. Cloud providers will also be offered free licenses to stream these games.

Now, all eyes are on the Ninth Circuit Court of Appeals and Microsoft’s potential deal with the CMA in the UK.

Updated July 12, 8:06 p.m. ET: Added tweets from Activision Blizzard moderators.

Adjusted July 12, 7:33 p.m. ET: Based on a CNBC report, this article originally said Microsoft and the CMA may have agreed to a “small divestment.” CNBC corrected its article and now says that Microsoft offered to divest without saying the change was accepted.