Microsoft faces fresh US appeal after court allows takeover of video game maker

The 69 billion US dollar deal for Activision Blizzard has come under fire from regulators in the US and UK over concerns it will stifle competition.

The takeover of the maker of Call Of Duty, World Of Warcraft and Candy Crush would be one of the biggest ever in the technology industry (Tim Ireland/PA) (PA Archive)

The US’s consumer protection watchdog is appealing against a decision to allow Microsoft to acquire video game maker Activision Blizzard.

The 69 billion US dollar (£53 billion) deal has come under fire from regulators in the US and the UK over concerns it will give Microsoft an unfair advantage in the market and affect gamers.

The takeover of the maker of Call Of Duty, World Of Warcraft and Candy Crush would be one of the biggest ever in the technology industry.

Earlier this week, US district judge Jacqueline Scott Corley rejected a request from the Federal Trade Commission (FTC) to block the high-profile acquisition, giving it the green light to go ahead.

We're disappointed that the FTC is continuing to pursue what has become a demonstrably weak case, and we will oppose further efforts to delay the ability to move forward

Brad Smith, Microsoft's president

She said the FTC has not shown it is likely to prevail if it took the case to trial.

It also prompted the UK’s Competition and Markets Authority (CMA) to say it was open to proposals about how the deal could be amended, having previously moved to block it altogether.

But the FTC has filed an appeal against the ruling made by Judge Corley.

Its arguments for appealing against the decision are due to be outlined at a later date.

The president of Microsoft, Brad Smith, said the tech giant does not want any more delays to the takeover.

He said in a statement: “The District Court’s ruling makes crystal clear that this acquisition is good for both competition and consumers.

“We’re disappointed that the FTC is continuing to pursue what has become a demonstrably weak case, and we will oppose further efforts to delay the ability to move forward.”

The chief communications officer of Activision Blizzard, Lulu Cheng Meservey, said in a tweet following the appeal: “The facts haven’t changed. We’re confident the US will remain among the 39 countries where the merger can close.

“We look forward to demonstrating the strength of our case in court – again.”

The merger has been criticised by regulators on the grounds that it will stifle competition in the fast-growing cloud gaming market, where video games are played using remote servers and have no need for downloads.

The CMA claimed that Microsoft, which owns Xbox, already accounts for between 60% and 70% of cloud gaming services.

Merging the two companies could therefore give Microsoft an unfair advantage and undermine new and innovative competitors, it argued.

Nevertheless, the CMA said on Tuesday it was willing to engage with the business on the grounds that it thinks of ways to modify the deal.

“These discussions remain at an early stage and the nature and timing of next steps will be determined in due course”, a spokesperson for the regulator said.

“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.”

It meant that a legal battle in the UK, due to commence in court later this month, has been halted.