Microsoft Wins Court Battle Against FTC Over Activision Blizzard Acquisition [Update: FTC Appealing]

Federal Judge Jacqueline Scott Corley has ruled against the Federal Trade Commission’s attempt to block Microsoft from closing its $69 billion acquisition of Activision Blizzard until it can be fully reviewed, freeing up the companies to complete the deal before a July 18 deadline, and potentially paving the way for them to dramatically reshape the future of gaming in the years to come.

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Judge Corley writes in her 53-page decision:

This Court’s responsibility in this case is narrow. It is to decide if, notwithstanding these current circumstances, the merger should be halted—perhaps even terminated—pending resolution of the FTC administrative action. For the reasons explained, the Court finds the FTC has not shown a likelihood it will prevail on its claim this particular vertical merger in this specific industry may substantially lessen competition. To the contrary, the record evidence points to more consumer access to Call of Duty and other Activision content. The motion for a preliminary injunction is therefore DENIED.

On just about every point, the Judge found the FTC’s arguments wanting. In particular, she was unmoved by Harvard economics professor Robin Lee’s analysis that Microsoft would have a financial incentive to make Call of Duty and Xbox console exclusive, and wrote that it failed to take into account plans for the franchise to remain on PC, come to Switch, and be accessible through cloud gaming.

“Before the merger, a consumer wanting to play a Call of Duty console game had to buy a PlayStation or an Xbox,” Judge Corley wrote. “After the merger, consumers can utilize the cloud to play on the device of choice, including, it is intended, on the Nintendo Switch. Perhaps bad for Sony. But good for Call of Duty gamers and future gamers.”

What happens to the Microsoft Activision deal now?

The FTC can try to appeal the ruling, and still has its own anti-trust lawsuit in the works, but both appear unlikely at this juncture to derail the deal. The last obstacle in Microsoft’s way, the Competition and Markets Authority (CMA) blocking the deal in the UK, also appears to be disappearing. Microsoft President Brad Smith tweeted that it is currently set to negotiate with the CMA on final remedies to win back approval for the deal.

“We’re grateful to the court for swiftly deciding in our favor,” Microsoft Gaming CEO Phil Spencer tweeted after the decision was announced. “The evidence showed the Activision Blizzard deal is good for the industry and the FTC’s claims about console switching, multi-game subscription services, and cloud don’t reflect the realities of the gaming market.” Activision’s stock price is now the highest it’s been since the deal was first announced back in January 2022, approaching the planned sale price of $95 a share.

The decision comes after a five-day hearing in the Northern District Court of California which included testimony and major revelations from high-ranking industry figures ranging from Spencer to Sony Interactive Gaming CEO Jim Ryan. The FTC tried to argue that Microsoft’s deal to buy Activision Blizzard would have wide-ranging consequences that would harm consumers and lead to less competition in the console gaming market, while Microsoft defended the acquisition, claiming it was a necessary strategic move to counter Sony’s dominance with the PlayStation 5.

Much of the proceedings revolved around debating whether high-end console gaming—Xbox and PlayStation—should be considered separately from PC, Nintendo Switch, and other hardware, and whether franchises like Call of Duty are popular and profitable enough to single-handedly swing momentum from one company to another. At one point while on the stand, Spencer even held up his hand and promised the court that he would not remove Call of Duty from PS5, even as Microsoft and Sony struggled to agree to future licensing terms for the franchise behind closed doors.

Testimony during the trial revealed plenty of gamesmanship on both sides, as well as interesting details about other attempted acquisitions and exclusivity deals. Prior to making an offer for Activision, court documents revealed that Microsoft had also discussed buying Japanese publishers Sega and Square Enix. Corporate emails also showed that executives at the tech giant often discussed making new games exclusive, like Bethesda Software’s upcoming Indiana Jones project, in order to compete with Sony’s opposing deals.

Ultimately, Judge Corley wrote that those examples were unpersuasive because they weren’t live service, multiplatform multiplayer games like Call of Duty. She instead cited Minecraft’s continued non-exclusive availability as a counterexample. “While the FTC argues Microsoft’s ‘past conduct following similar transactions also demonstrates its likely anticompetitive nature,’ presumably referring to the ZeniMax acquisition, this ignores the Mojang/Minecraft acquisition,” she wrote.

Update 7/11/23 12:13 p.m. ET: Added more information about the court’s ruling and the CMA re-starting negotiations with Microsoft.

Update 2, 7/12/23 7:35pm ET: The FTC says it will be appealing.

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One Thing Still Stands In The Way Of Xbox’s Activision Takeover

Microsoft’s deal to buy Activision Blizzard for $69 billion is closer than ever to becoming a reality after the companies defeated the Federal Trade Commission in court this week. While the FTC can still appeal, all eyes now turn back to regulators in the UK, that last thorn in the tech giant’s side as it seeks to dramatically alter the trajectory of Xbox.

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The UK’s Competition and Markets Authority (CMA) blocked the deal earlier this year over concerns that it would lead Microsoft to dominate the growing market for cloud gaming subscription services. The companies immediately appealed, and now both sides have reopened negotiations on potential “remedies” to assuage regulators’ antitrust concerns following the FTC’s recent failure to get a district judge to approve a preliminary injunction. That decision in the U.S. seems to have fast-tracked a resolution in the UK as well.

But if and how Microsoft will ultimately convince the CMA to approve its purchase of Call of Duty, World of Warcraft, Diablo, and other massive gaming franchises remains to be seen. The CMA is now threatening that any changes to Microsoft’s terms for the deal in the UK could require an entirely new investigation which would presumably take several months beyond the current July 18 deadline for the acquisition.

“Whilst merging parties don’t have the opportunity to put forward new remedies once a final report has been issued, they can choose to restructure a deal, which can lead to a new merger investigation,” the CMA said in a statement to The Verge. It continued:

Microsoft and Activision have indicated that they are considering how the transaction might be modified, and the CMA is prepared to engage with them on this basis. These discussions remain at an early stage and the nature and timing of next steps will be determined in due course. While both parties have requested a pause in Microsoft’s appeal to allow these discussions to take place, the CMA decision set out in its final report still stands.

That certainly doesn’t sound like the CMA is working on a quick fix for the deal. Or it could just be playing hardball. As previously reported by Axios, one possible way for Microsoft to appease regulators in the UK would be to have a “carve out” for Call of Duty on Game Pass and xCloud. Instead of making the hit shooter series available on those services in that market, it could agree to pull it from the UK version of them. That would potentially address the CMA’s core concerns about Call of Duty being used to give Microsoft a monopoly in cloud gaming. Now the question is whether the company can offer something like that without starting the entire review process over from scratch.

Microsoft executives had previously suggested that any more delays at this juncture would essentially kill the Activision merger. They had also hinted at the possibility that they might be willing to push forward with the deal without the CMA’s approval and simply pull Activision Blizzard games from the UK market entirely. Both would be drastic measures, even for one of the largest tech mergers in history.

Update 7/14/2023 9:15 a.m. ET: Bloomberg now reports that Microsoft is looking to sell the rights to its UK cloud gaming business to appease the CMA. It would then be operated by a separate entity in that country to ameliorate antitrust concerns.

Following that news, the CMA has also pushed its deadline for a final order on the deal into August, hinting at the likelihood it will ultimately approve it under these new conditions. Activision is already set to be removed from the NASDAQ stock exchange on July 17 ahead of the acquisition’s close. The Federal Trade Commission, meanwhile, is hoping a last ditch effort with the Ninth Circuit of Appeals can still pause the deal, although it seems increasingly unlikely.

      

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Activision, Microsoft Set To Merge After FTC Fails To Stop Deal

Image for article titled Activision Set To Become Part Of Microsoft After FTC's Last-Ditch Effort Fails

Photo: Anadolu Agency (Getty Images)

The U.S. Ninth Circuit Court of Appeals has denied the Federal Trade Commission’s final request to pause Microsoft’s takeover of Activision Blizzard, likely paving the way for the biggest-ever merger in gaming to finally move forward after a more than year-long regulatory saga.

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The FTC had sought to have the acquisition kept on hold ahead of a July 18 deadline while appealing a ruling from the Northern District of California that sided with Microsoft. It was the antitrust agency’s last chance to stop the historic $69 billion merger that would see major gaming franchises like Call of Duty, World of Warcraft, and Candy Crush all become an extension of Xbox.

Regulators argued that the federal court had ignored evidence that Microsoft would have reasonable incentive to potentially make those franchises exclusives to its console and cloud gaming platforms in order to corner the market. Microsoft in turn blamed the FTC for using delay tactics and underselling a massive $3 billion breakup fee Microsoft would have to pay to Activision if the deal ended up not going through for some reason.

The Ninth Circuit will still handle that appeal, but denied the FTC’s motion to block the merger until that ruling was made, giving Microsoft the greenlight to close its deal on July 17.

It’s been a long journey up to this point, full of twists and turns, including abroad in the UK, the only country to block the deal so far. That country’s Competition and Markets Authority (CMA) had denied the merger on the grounds that it would give Microsoft too much of an advantage in the nascent market of cloud gaming.

Following the FTC’s initial court defeat earlier this week, however, the CMA announced it was back negotiating with Microsoft over new ways to resolve the antitrust conflicts. It’s now extended its final deadline for approval of the deal into August, suggesting it’s prepared to accept the tech giant’s latest concessions.

While nothing’s final until it’s final, it now looks like Microsoft’s shocking acquisition of one of the biggest game publishers in the world is about to become a reality, and will soon have the potential to completely reshape the video gaming landscape in the process. Or maybe Xbox owners will just get a bunch more free games on Game Pass. Time will tell.

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Activision Sues YouTuber After He Tried Charging For TikTok Vid

Update 8/11/23 4:50 p.m. ET: As spotted by Reuters, Activision Blizzard has dropped its counter-lawsuit against Anthony Fantano, the super popular music critic behind the well-known YouTube channel The Needle Drop.

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In court documents filed on August 10, the company said it “dismisses this entire action,” which includes every claim made in the suit. Activision’s doing this with prejudice, meaning it can’t refile the lawsuit later if it wanted to.

Original story follows…

On July 24, Call of Duty maker Activision Blizzard filed a lawsuit in California alleging that YouTuber Anthony Fantano, a music critic who runs the immensely popular channel The Needle Drop, is misusing intellectual property law and “leveraging the popularity” of a widespread TikTok voice clip he created for financial gain. The company said that Fantano, widely known as “the internet’s busiest music nerd,” has embarked on a “scheme” to sue certain users of the clip unless they pay him “extortionate amounts of money,” with Activision Blizzard apparently being Fantano’s largest target.

At the center of the dispute is a widely used voice clip of Fantano saying “it’s enough slices!” The clip originates in a 2021 TikTok that features Fantano reacting to a pizza being cut into increasingly smaller slices. Fantano looks on appreciatively for a while but the slicing just doesn’t stop, prompting him to eventually scream the now-famous line.

The video garnered millions of views and spawned thousands of copycats, leading Activision Blizzard to create their own rendition of the meme in a now-deleted June 2023 TikTok promoting some Crash Bandicoot shoes. Apparently, Fantano wasn’t about it, alleging it created a “false endorsement” of the product without him actually being associated with it. He sent the company a cease-and-desist letter on June 27 demanding that Activision Blizzard stopped using the audio and made a six-figure settlement payment to him. If the company didn’t pay up, he would “initiate litigation.” Interestingly, though, Activision’s lawsuit alleges that Fantano himself opted to put the clip in TikTok’s “Commercial Sounds” library, specifically designating it as usable in advertisements.

“In reliance on TikTok’s explicit representation that the ‘Slices Audio’ was part of its ‘Commercial Sounds’ library— described as ‘sounds that are licensed for commercial use’—Activision paired that video with the ‘Slices Audio,’” the company wrote in the 33-page lawsuit. ‘Notwithstanding that thousands of TikTok videos containing the Slices Audio have been available on TikTok for years without complaint, Fantano suddenly decided that Activision’s video infringed his publicity rights and constituted a false endorsement.”

Activision is effectively arguing that Fantano is trying to game the law for his own gain, with the company’s lawyers writing, “Fantano has embarked on a scheme whereby he selectively threatens to sue certain users of the Slices Audio unless they pay him extortionate amounts of money for their alleged use.”

“This dispute is a textbook example of how intellectual property law can be misused by individuals to leverage unfair cash payments,” Activision’s lawyers wrote. “Fantano was very happy to receive the benefit of the public use of the Slices Video. It was only after he identified a financial opportunity—namely, receiving unjustified settlement payments—that he suddenly decided that his consent was limited. The law does not permit, and the court should not countenance, such overt gamesmanship.”

The company is seeking reimbursement of its legal expenses and a ruling declaring that Fantano cannot sue TikTok users for using the voice clip.

Richard Hoeg, a lawyer who specializes in digital and video game law, told Kotaku in an email that while he hasn’t seen all of the materials in the lawsuit, based on what he knows this far, the company has a decent case here.

“As described by Activision (and remembering theirs is only one side of the story), it would seem they have a good case,” Hoeg said. “The TikTok audio library appears to allow for general commercial use on TikTok, so anyone placing content in the library should be limited in their rights to challenge. That said, there still could be facts we don’t know like whether an unauthorized third party actually effected the sound’s inclusion or even whether it might have been automated.”

Kotaku reached out to Activision Blizzard and Fantano for comment.

 

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Hasbro Wants Transformers Games Back, But Activision Lost Them

Remember those Xbox 360/PS3-era Transformers games? Wouldn’t it be cool if you could easily buy and play those in 2023 on modern platforms? I think so. And so does Hasbro. But according to the toy company behind the popular transforming robot franchise, Activision has apparently lost the games and doesn’t know where they’re stored.

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Released in June 2010, Transformers: War for Cybertron was a well-received third-person shooter that got an equally great sequel in 2012, Fall of Cybertron. (And then in 2014 we got Rise of Dark Spark, which wasn’t very good and was tied into the live-action films.) What made the first two games so memorable and beloved was that they told their own stories about the origins of popular characters like Megatron and Optimus Prime while featuring kick-ass combat that included the ability to transform into different vehicles. Sadly, in 2018, all of these Activision-published Transformers games (and several it commissioned from other developers) were yanked from digital stores, making them hard to acquire and play in 2023. It seems that Hasbro now wants that to change, suggesting the games could make a perfect fit for Xbox Game Pass, once Activision, uh…finds them.

IGN / Hasbro / Activision

In an interview with Transformers World 2005 posted on July 28, Hasbro talked about its new line of video game-inspired Transformers action figures. Some of these new toys are based on designs first seen in the Activision Cybertron games. So naturally, the site asked Hasbro about the possibility of re-releasing these popular games alongside the new toys. Unfortunately, that won’t be happening.

“Sadly, apparently Activision’s not sure what hard drives they’re on in their building,” Hasbro told TFW2005. “When a company eats a company that eats a company things get lost, and that’s very frustrating.”

Kotaku has inquired with Activision about the Transformers games’ current status.

Hasbro wants to add the Cybertron series to Game Pass

Hasbro further added that the company hopes the merger between Xbox and Activision will lead to people digging through “all of the archives and every hard drive” to find the old games and bring them back. Hasbro even added that it thinks these games would make “easy” choices for Xbox’s Game Pass.

“We want those games back up for people to have a chance to play,” said the Hasbro rep.

Interestingly, Activision’s lack of organization seems to have caused some headaches for Hasbro’s toy designers who are working on the Gamer Edition figures. The toy company explained that it had to load up the games on their original platforms and play through them to find specific details they wanted to recreate for the toys.

“For World of Cybertron we had to rip it ourselves, because [Activision] could not find it—they kept sending concept art instead, which we didn’t want,” explained Hasbro. “So we booted up an old computer and ripped them all out from there. Which was a learning experience and a long weekend, because we just wanted to get it right, so that’s why we did it like that.”

Update 08/01/2023 5:15 p.m. ET: Some 24 hours after the original publication of this story, Activision’s CCO and EVP of corporate affairs Lulu Cheng Meservey tweeted that the publisher has always had “the code” for the Transformers games, and that it was never lost.

On August 1, Axios’ Stephen Totilo got a response from Activision pointing him toward a comment from Hasbro:

To clarify, comments that suggest Transformers games have been lost were made in error. We apologize to Activision and regret any confusion [as] they’ve been great partners and we look forward to future opportunities to work together.

While this seems to clarify matters, there are still some questions. Activision has yet to confirm if it actually knows where the source code for the games is specifically located. I also would love to know why Activision waited so long to comment (the initial interview was posted on July 28) and why Hasbro claimed to not have access to key assets when developing its toys based on the games.

It’s also strange that Hasbro, which says it wants to put these games on Game Pass, hasn’t done so for years now. If the games aren’t lost, give ‘em to Hasbro, then?

Hmm.

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Call of Duty Veteran Announces He’s Leaving Activision

Two soldiers are shown with a tear effect showing one half of both of their faces in the center.

Image: Activision

After 18 years, David Vonderhaar, the studio design director at Treyarch, announced he’s leaving Activision after shipping eight Call of Duty games since 2004.

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Vonderhaar made the announcement on his personal LinkedIn account, where he confirmed he’s moved on to a new project at a different studio but didn’t go into specifics in his post. He also thanked his former coworkers at Treyarch and the Call of Duty fans that have played the studio’s games over the years.

Today I am sharing that I have left Activision and Treyarch after an incredible 18 years and 8 Call of Duty games.

To my co-workers at Treyarch, I am immensely grateful for the time we invested working to improve our craft, never sitting on successes, and always wondering how to improve what we design and how we produce it.

Thank you to the Call of Duty community for your passion and enthusiasm. That energy has often fueled our determination as a studio and individuals. I will always be grateful for the opportunity to interact with so many of you directly online and in person. This energy will always be a massive part of me.

I am staying in the games industry, working on an undisclosed project I can’t discuss yet, but I am excited about a rare and unique opportunity. I’ll update you as soon as possible.

Vonderhaar’s Call of Duty portfolio is synonymous with the Black Ops series, which has been part of the military shooter’s rotating stable of sub-franchises since the first one launched in 2010. The most recent entry was 2020’s Call of Duty: Black Ops Cold War.

Earlier this week, Activision and Sledgehammer Games unveiled that the next Call of Duty game will be called Call of Duty: Modern Warfare III, not to be confused with Call of Duty: Modern Warfare 3, as the new game is part of the rebooted Modern Warfare sub-series that began in 2019.

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Microsoft Sells Activision Blizzard Streaming Rights To Ubisoft

Somehow, over a year later, Microsoft’s attempted $69 billion takeover of Activision Blizzard just took its weirdest turn yet. The tech giant announced today that it will sell off the streaming rights for Call of Duty, Overwatch, and more to rival publisher Ubisoft as part of one last attempt to get holdout regulators in the UK to approve the deal.

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“To address the concerns about the impact of the proposed acquisition on cloud game streaming raised by the UK Competition and Markets Authority, we are restructuring the transaction to acquire a narrower set of rights,” Microsoft President Brad Smith wrote in an August 22 blog post. “This includes executing an agreement effective at the closing of our merger that transfers the cloud streaming rights for all current and new Activision Blizzard PC and console games released over the next 15 years to Ubisoft Entertainment SA, a leading global game publisher. The rights will be in perpetuity.”

Ubisoft confirmed in its own blog post that this means Activision Blizzard games like Modern Warfare II will soon be added to its own Ubisoft+ Multi Access subscription service, as well as its Ubisoft+ Classics add-on for PlayStation users. While the games can still be licensed for Microsoft’s own Game Pass subscription service, they would not be able to become exclusive to any one cloud gaming platform. Ubisoft+, which includes big blockbusters like Assassin’s Creed, Far Cry, and Rainbow Six Siege, already costs more than Game Pass on console, and it will be interesting to see how this new side-deal transforms the service.

How exactly will this messy divestiture work? According to the Competition and Markets Authority in the UK, Ubisoft will compensate Microsoft through a “one-off payment” as well as a “wholesale pricing mechanism” that includes the option to pay based on usage. Ubisoft will then have the ability to license out the games to other subscription services, as well as to pay a fee to force Microsoft to port Activision Games to competing PC gaming operating systems like Linux.

Originally set to close by mid-July, Microsoft’s plan to buy Activision Blizzard ran into all sorts of roadblocks in the U.S. and UK. Despite regulatory approval in the European Union, the Federal Trade Commission ended up suing to try and prevent the deal from closing earlier this summer, only for the judge in the case to end up denying the request and side with Microsoft. The CMA, meanwhile, blocked the deal back in April claiming it would give Microsoft a big competitive advantage in the cloud gaming market if it ever decided to make games like Call of Duty exclusive to streaming on Game Pass.

After the failure of the FTC’s lawsuit, Microsoft and the CMA began negotiating on potential remedies again, culminating in the new and much more convoluted version of the deal laid out today. An agreement was also signed with Sony to secure ongoing access to Call of Duty games on PlayStation 5 and future consoles for the next 10 years. Microsoft and Activision Blizzard recently signed a 90-day extension of their merger agreement which expires on October 18. The CMA will review the new terms before then, but this whole saga isn’t over yet.

“This is not a green light,” CMA chief executive Sarah Cardell said in a statement. “We will carefully and objectively assess the details of the restructured deal and its impact on competition, including in light of third-party comments. Our goal has not changed — any future decision on this new deal will ensure that the growing cloud gaming market continues to benefit from open and effective competition driving innovation and choice.”

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Activision Says Switch 2’s Power Is On Par With PS4, Xbox One

A Nintendo Switch sits atop a wooden surface with its detached wireless Joy-Con controllers next to it.

Image: SOPA Images (Getty Images)

As reports that a Nintendo Switch successor is inbound become more commonplace, we’re learning more about what we can likely expect from the company’s next console. Maybe this was to be expected, but new details suggest that the performance of the Nintendo Switch 2—or whatever it ends up being called—may be roughly on par with the PlayStation 4 and Xbox One. That would represent a nice step up from the current Switch, though obviously not enough of one to match Sony and Microsoft’s latest consoles.

Thank You, PS Plus, For Making My Backlog Even Bigger

Read More: Report: Nintendo’s Switch Successor Console Releases In 2024

According to The Verge, Activision Blizzard executives—including CEO Bobby Kotick—met with Nintendo in December 2022 to chat about the Switch 2. As uncovered in a heavily redacted summary document labeled “NG Switch Draft.pdf” (a stand-in for “next-generation Switch”) that was made public due to the FTC v. Microsoft hearings, Activision’s head of platform strategy and partner relations, Chris Schnakenberg, suggested in internal emails that the Mario creator’s Switch successor might be more akin to the PS4 and Xbox One than to the latest hardware on the market.

“Given the closer alignment to Gen8 platforms in terms of performance and our previous offerings on PS4 / Xbox One, it is reasonable to assume we could make something compelling for the NG Switch as well,” Activision Blizzard said in the documentation reviewed by The Verge. “It would be helpful to secure early access to development hardware prototypes and prove that out nice and early.”

It’s been many generations now since Nintendo was competing directly with Microsoft and Sony in the technical power department, so it’s hardly surprising that the next Switch may not be able to push as many polygons as a PlayStation 5. What it will likely do is allow the company to offer a nice increase in power while still preserving the Switch’s hybrid nature, which should make games like The Legend of Zelda: Tears of the Kingdom look even better.

Kotaku reached out to Nintendo for comment. When reached for a comment, an Activision Blizzard spokesperson declined to discuss the nature of the news.

Read More: Report: Nintendo Is Holding Secret Switch 2 Demos For Developers

Although we’ve potentially now got an idea of the Nintendo Switch 2’s power, it still remains to be seen exactly how the company’s next-generation console will actually perform. At the very least, hopefully we can expect Nintendo to address the drift in its wireless controllers. Come on, Nintendo, I’m begging you here.

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Microsoft’s Giant Activision Deal Finally Passing Last Hurdle

Twenty months after it was first announced, Microsoft’s unprecedented deal to buy Call of Duty and Candy Crush publisher Activision Blizzard for $69 billion appears to have beaten its final boss. The UK’s Competition and Markets Authority revealed on Friday that it has provisionally approved the tech giant’s latest version of the acquisition, which includes convoluted carve-outs for cloud gaming rights. After tons of dramatic twists and turns, the biggest gaming merger ever looks like it’s finally happening.

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“This is a new and substantially different deal, which keeps the cloud distribution of these important games in the hands of a strong independent supplier, Ubisoft, rather than under the control of Microsoft,” Colin Raftery, the CMA’s senior director of mergers, said in a press release. “With additional protections to make sure that the deal is properly implemented, this will maintain the structure of the market, enabling open competition to continue to shape the development of cloud gaming in the years to come, and giving UK gamers the opportunity to access Activision’s games in many different ways, including through cloud-based multigame subscription services.”

The CMA had previously rejected the deal over concerns that acquiring popular gaming franchises like Call of Duty, Overwatch, Diablo, and more would give Microsoft a monopoly in the cloud gaming space. Microsoft started hinting that it might get around the CMA’s decision by just removing Activision games from the UK entirely, and later sent out rumblings that it was preparing to close the deal even without permission from the Federal Trade Commission in the U.S. which had sued it over anti-trust concerns.

The FTC then sued for an injunction to block the deal, leading to an extradordiary multi-day trial in federal court full of testimony by gaming executives from Xbox, PlayStation, Bethesda, and other companies that included an unusual level of behind-the-scenes looks into the normally hyper secretive gaming industry.

How Microsoft saved the Activision Blizzard deal

The judge in the case ended up siding with Microsoft, however, paving the way for it to close the deal in the U.S. and eventually forcing the CMA back into negotiations on a reversal of its previous rejection. According to reporting by Bloomberg, it was all part of a bluffing strategy by Microsoft to ultimately save the deal.

To placate UK regulators, Microsoft has now agreed to sell cloud gaming rights for Activision Blizzard’s games to Ubisoft. While it can still pay to stream hits like Modern Warfare II and Diablo IV on services like Game Pass, Ubisoft will have final say for the next 15 years, keeping Microsoft from having exclusive control. That complicated carve-out only applies to the UK, however, and regulators said today that their last demand is for Microsoft to offer some sort of enforcement mechanism so that the CMA can check to make sure it is adhering to the terms of the agreement. A final decision for approval will arrive by October 6.

“The CMA’s position has been consistent throughout–this merger could only go ahead if competition, innovation, and choice in cloud gaming was preserved,” Sarah Cardell, CEO of the CMA, said in a press release. “In response to our original prohibition, Microsoft has now substantially restructured the deal, taking the necessary steps to address our original concerns. It would have been far better, though, if Microsoft had put forward this restructure during our original investigation. This case illustrates the costs, uncertainty and delay that parties can incur if a credible and effective remedy option exists but is not put on the table at the right time.”

Notably, the CMA’s provisional approval comes just one day after UK treasury head, Jeremy Hunt, met with gaming companies in California. The government agency released photographs from the event on social media today. They show Activision Blizzard CEO Bobby Kotick as one of the executives in attendance, and the one seated closest to Hunt. The longtime Call of Duty boss threatened earlier this year that the UK would become “death valley” if it did not approve the sale. Kotick is estimated to earn a windfall of $390 million once the deal goes through. That’s over 20 times the $18 million settlement Activision Blizzard agreed to pay the Equal Employment and Opportunity Commission following a multi-year investigation into sexual harassment and discrimination at the company.

Update 10/13/2023 8:51 a.m. ET: The CMA announced its final approval for the deal today, saying it was satisfied that Microsoft’s new cloud agreement with Ubisoft mitigates the threat of a monopoly in the cloud gaming space. The regulators blamed the tech giant for the process taking so long.

“ Microsoft had the chance to restructure during our initial investigation but instead continued to insist on a package of measures that we told them simply wouldn’t work,” said CMA chief executive Sarah Cardell. “Dragging out proceedings in this way only wastes time and money.”

Microsoft now has the greenlight to close the Activision deal on or before its new October 18 deadline.

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Activision Blizzard Games Should Appear On Game Pass In 2024

When speculation rife that Microsoft expects to finalize its purchase of Activision Blizzard this week, and COD: Modern Warfare III out in a month, it seems people have been wondering when Activision’s games will start appearing on Microsoft’s Game Pass. According to a tweet from Activision Blizzard, it should be some time next year.

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The entire debacle of Microsoft’s attempts to buy Activision Blizzard feels it has been clogging up gaming news for years. In fact, it all started only last January, but followed hot on the heels of months of grim and gruesome reporting on the heinous working conditions at the developer’s various studios. This week could see that enormous, shitty chapter come to a close. Presumably so another enormous, shitty chapter can start.

But still, more games on Game Pass!

“As we continue to work toward regulatory approval of the Microsoft deal,” said Activision Blizzard on X, “we’ve been getting some questions whether our upcoming and recently launched games will be available via Game Pass.”

The Verge reported on Friday that Microsoft is getting ready to close the $68.7 billion deal, with October 13 thought to be the Big Day. Of course, this is all being held back by the UK Competition and Markets Authority (CMA), which is the one international regulator that managed to decisively block the deal. However, being the UK’s CMA, it did it in the most cack-handed way, blathering on about unfair market control of cloud gaming, or some-such abstract technicality.

This complete whiff, entirely ignoring the concerns of, you know, Microsoft forming an actual monopoly, ensured a pathway for the two corporations to renegotiate arrangements such that it would avert the CMA’s peculiar strategy, and a couple of weeks ago it was provisionally stated it had succeeded. We should be finding out this week if the CMA is entirely satisfied, and given that’s likely to be the case, signet-ring-bearing hands will shake and overpriced Champagne shall be popped, as a bunch of extraordinarily rich people stand to get even richer.

Read More: Hold Onto Your Butts, Microsoft’s Massive Activision Blizzard Deal Is Finally Happening

“While we do not have plans to put Modern Warfare III or Diablo IV into Game Pass this year,” continues that Activision tweet, “once the deal closes, we expect to start working with Xbox to bring our titles to more players around the world.” So when? “And we anticipate that we would begin adding games into Game Pass sometime in the course of next year.”

It’s oddly slow, if anything. They’ll be the same company, and they’ve known they would been the same company for the last 20 months, so it seems strange that it’ll take another few months before Microsoft will be hosting what will suddenly become first-party games on its own streaming service.

There’s one small cloud hanging over their grey-suited celebrations: the FTC still has an appear in with the Ninth Circuit Court of Appeals, and that decision won’t appear until December. Should it succeed, it would then become about trying to undo the already sealed deal, which would be a whole other level of difficult, and no one surely believes the FTC has the teeth or the fight in it to win.

So, the industry shrinks yet again, with less competition, fewer major publishers attempting to outsell each other, and so less choice and worse prices for the gaming public. It doesn’t seem like the games industry can be far away from the monstrous and idiotic situation of the music industry, in the control of the Big Four record labels. It certainly seems unlikely that any regulatory bodies will be able to stop it, either way.

But you know, you can get next year’s COD on your subscription, so shhhhh.

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by pbnbigesdi Posted on
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