Judge Rules Microsoft Able to Buy Activision Blizzard

Facts

• Activision Blizzard's stock closed up 10% on Tuesday, reaching a 52-week high of $92.91 per share, after US District Judge Jacqueline Scott Corley denied a motion from the Federal Trade Commission (FTC) requesting a preliminary injunction to block its merger with Microsoft.¹
• After a week-long hearing in San Francisco, California, Judge Corley ruled that the US regulators failed to demonstrate how Microsoft's acquisition of Activision Blizzard would hurt competition as the Xbox maker has publicly committed to license Activision's Call of Duty to rivals.²
• Despite Tuesday's ruling and the subsequent stock spike, shares are trading below Microsoft's takeover offer of $95 per share.³
• The FTC has until July 14 to appeal Judge Corley's decision not to grant a preliminary injunction, which allows the agreement to move forward ahead of its July 18 contractual deadline despite the FTC's antitrust case against Microsoft.⁴
• In 2021, Microsoft acquired Zenimax for $11B, which resulted in many popular games slated for release on both Xbox and PlayStation shifting to Xbox exclusively.⁵
• Meanwhile, the UK Competition and Markets Authority — which had vetoed the $69B deal earlier this year — said it was "ready to consider any proposals from Microsoft to restructure the transaction," while agreeing to a stay in litigation "in the public interest."⁶

Sources: ¹CNBC, ²BBC News, ³Forbes, ⁴FOX News, ⁵Business Insider, and ⁶Bloomberg.

Narratives

• Narrative A, as provided by Guardian. Concerns about the acquisition of Call of Duty owner Activision Blizzard are mounting, not only over Microsoft's capacity to keep the game away from competitors in the home console market, but also because this move may give the Xbox owner undue power to shape the future emerging cloud gaming market. This deal risks enabling Microsoft to establish a damaging monopoly.
• Narrative B, as provided by The Motley Fool. Once likely to block the Activision-Microsoft deal, regulatory obstacles are disappearing as the winds continue to change in both the UK and the US. This is a positive outcome in the long uphill battle to bring Activision game franchises under Microsoft's umbrella — a move that could boost gaming-related artificial intelligence and usher in a new era for the industry.

Predictions