The Federal Trade Commission (FTC) is appealing a recent US federal court order that cleared the way for Microsoft to purchase Activision Blizzard. The FTC filed its opposition to Judge Jacqueline Scott Corley’s decision, asking for the deal to be paused once more, this time by the Ninth Circuit Court of Appeals.
Microsoft won a grueling fight with the FTC earlier this week, with a federal judge denying a preliminary injunction request from the US regulator. “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,” Judge Corley wrote in the ruling. “To the contrary, the record evidence points to more consumer access to Call of Duty and other Activision content.”
You can read the full notice of appeal here, but the document doesn’t have much more than this.Screenshot by Jay Peters / The Verge
If the preliminary injunction had been granted, it would have temporarily blocked Microsoft from closing its Activision Blizzard deal until the result of the FTC’s own administrative case against the company. That separate legal challenge is still due to commence on August 2nd.
Now that the FTC is choosing to appeal Judge Corley’s decision, the regulator needs the Ninth Circuit Court of Appeals to issue an emergency stay to extend the existing temporary restraining order (TRO) that is set to expire at 11:59PM PT on Friday, July 14th. It’s not clear if the appeals court will even rule before the deal deadline on July 18th, potentially leaving the door open for Microsoft to close the Activision Blizzard deal on Monday or Tuesday without a restraining order in place.
The FTC makes a series of arguments against the lower court ruling, arguing that:
- The ruling applied the wrong legal standard, relying on government cases seeking permanent injunctions.
- It erred in saying potential consumer benefits of Xbox Game Pass outweighed the potential for foreclosure of games like Call of Duty appearing on other subscription platforms.
- It relied too much on Microsoft’s agreements to provide games to other cloud services.
- It missed potential partial foreclosure strategies — or ways that Microsoft could degrade the experience of games on other platforms without fully dropping support.
- It ignored the FTC’s evidence about Microsoft’s incentives to foreclose access to games.