Microsoft wins FTC appeal challenging the Activision Blizzard deal.

Posted by zmnteam

Microsoft has won a key legal victory in the Federal Trade Commission’s attempt to stop its blockbuster acquisition of Activision Blizzard. On May 7, the US Court of Appeals for the Ninth Circuit affirmed a lower court decision that denied the FTC’s request for a preliminary injunction, finding the agency did not make an adequate showing that the deal was likely to substantially lessen competition.

What the court decided

The Ninth Circuit panel agreed that the district court applied the correct legal standard and did not abuse its discretion when it declined to pause the merger. In practical terms, the appeals ruling upholds the July 2023 order from the Northern District of California that allowed Microsoft to proceed toward closing.

The FTC argued the acquisition would likely violate Section 7 of the Clayton Act by reducing competition in three US markets: gaming consoles, game subscription services, and cloud game streaming. The appeals court said the FTC failed to show a sufficient likelihood of success on these theories at the preliminary injunction stage.

Why Call of Duty mattered

A central concern in the case was whether Microsoft would have the incentive to make Activision’s blockbuster franchise Call of Duty exclusive to Xbox, or to degrade the PlayStation version in a way that could shift players and subscriptions toward Microsoft’s ecosystem.

The panel concluded the FTC did not sufficiently demonstrate that Microsoft would foreclose rivals in the console market through exclusivity or by offering an inferior version on PlayStation. The court also pointed to evidence and testimony indicating Activision Blizzard historically resisted placing its titles into subscription libraries, undercutting the FTC’s theory that the merger would substantially lessen competition in game subscription services.

Cloud gaming and subscriptions

For cloud gaming, the court found the FTC had not shown that Activision Blizzard content would be available to cloud streaming services absent the merger, which made it harder to prove a merger-related harm in that market. On subscription services, the panel agreed with the district court that the record did not support the FTC’s claims at the level needed to justify emergency injunctive relief.

Deal status and what happens next

Microsoft announced its plan to acquire Activision Blizzard in 2022 and completed the transaction in October 2023, after securing regulatory clearances including a reworked approval in the UK. Because the deal has already closed, the FTC’s appeal was focused on whether courts should have temporarily blocked the merger while the agency pursued its antitrust challenge.

The Ninth Circuit noted that a related administrative proceeding at the FTC remained pending at the time of the opinion. However, the appeals ruling makes it significantly harder for the agency to obtain court-ordered relief based on the same preliminary injunction record.

Key takeaways

The Ninth Circuit affirmed the denial of the FTC’s request for a preliminary injunction against Microsoft’s acquisition of Activision Blizzard.
The court said the FTC did not make an adequate showing that the merger was likely to substantially lessen competition in consoles, subscriptions, or cloud streaming.
Call of Duty exclusivity and potential degradation on PlayStation were major issues, but the panel found the FTC’s evidence insufficient at this stage.
The acquisition had already closed in 2023, so the appeal addressed whether courts should have paused the deal while the FTC litigated.

Sources

US Court of Appeals for the Ninth Circuit: FTC v. Microsoft Corp., No. 23-15992 (May 7, 2025).
Reuters report on the appeals decision (May 7, 2025).
FTC case page: Microsoft/Activision Blizzard (Matter No. 2210077).