Court Risks Competition in Gaming Marketplace by Denying FTC Injunction

Case on the merits is still scheduled to begin August 2.

Today, the U.S. District Court of the Northern District of California denied the Federal Trade Commission’s preliminary injunction of Microsoft’s $68.7 billion acquisition of Activision Blizzard. The agency previously filed an antitrust lawsuit against Microsoft to block the acquisition in order to prevent Microsoft from harming competition in the gaming marketplace, including games, consoles, and subscription services. Although the actual case on the merits is scheduled to begin August 2, antitrust enforcers often seek a preliminary injunction as stopping a merger before it has begun is much easier than undoing it after the fact.

The suit and the preliminary injunction follow a letter sent last year by Public Knowledge and other organizations encouraging the agency to “closely scrutinize” the buyout of a “structurally important gaming developer and publisher.” The complaint mirrors several of the issues raised in Public Knowledge’s March 2022 blog post about the transaction. Public Knowledge has cautioned that the merger raises serious competition issues and risks harming gamers and the gaming industry.

The following can be attributed to Charlotte Slaiman, Competition Policy Director at Public Knowledge:

“This is a disappointing loss for consumers. While the FTC may still prevail, consumers are less likely today to enjoy the benefits of a competitive video game industry than they were yesterday.  I’m especially disappointed to see the court’s focus on how weak antitrust law is today in stopping vertical mergers. Antitrust law needs to take the anti-competitive harms of vertical mergers more seriously. With each litigation loss, it becomes more and more clear that legislation is necessary if we want competitive markets. I hope this decision spurs Congress to redouble its efforts to strengthen antitrust law.”

View our latest blog post, “Will Microsoft Use Activision Blizzard to Freeze Out Rivals?” to learn why the deal merits rigorous scrutiny.

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