Microsoft Corp.’s acquisition of Activision Blizzard Inc. moved closer to completion today after a judge denied a preliminary injunction request from the Federal Trade Commission.

The injunction, which the FTC requested last month, would have blocked Microsoft from completing the proposed deal. The FTC can still proceed with a lawsuit it’s pursuing to scrap the transaction. However, today’s ruling increases the chance that Microsoft will close the acquisition before its June 18 completion deadline.

Update: Bloomberg reported late today that the FTC is leaning toward appealing the ruling. Although that decision isn’t final, the appeal reportedly could come Wednesday.

In January 2022, Microsoft agreed to buy Activision Blizzard for $68.7 billion. In December of the same year, the FTC sued to block the deal. The agency is concerned that the transaction could harm competition in the video game console and cloud gaming markets.

The FTC argues that, should Microsoft acquire Activision Blizzard, it could pull the latter company’s video games from consoles which compete with its Xbox system. The agency is also worried Microsoft might do the same with rival cloud gaming services. Since the deal was announced, regulators in the European Union and the U.K. have raised similar concerns.

To address the regulatory scrutiny, Microsoft has inked content licensing deals with Sony Group Corp. and Nintendo Co.. Ltd., its top two rivals in the console market. The deals will give the two companies access to Activision Blizzard’s popular “Call of Duty” game series for at least 10 years. Furthermore, Microsoft has pledged to make Activision Blizzard content available on competing cloud gaming services.

Those moves heavily factored into its legal win today. 

In the decision to deny the FTC’s request for an injunction, Judge Jacqueline Scott Corley wrote that “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.”

Microsoft President Brad Smith welcomed the decision in a statement. “We’re grateful to the Court in San Francisco for this quick and thorough decision and hope other jurisdictions will continue working towards a timely resolution,” the executive said. 

Microsoft’s proposed acquisition of Activision Blizzard has also faced scrutiny in the U.K. The U.K.’s Competition and Markets Authority, or CMA, moved to block the deal in late April over concerns it may hurt the cloud gaming market. Microsoft filed an appeal shortly thereafter.

Following today’s dismissal of the FTC injunction request, Microsoft announced that it’s putting its appeal in the U.K. on hold. The decision was made in coordination with the CMA. Microsoft and the CMA have agreed to explore ways that the terms of the Activision Blizzard acquisition could be modified to address the regulator’s concerns. 

“While we ultimately disagree with the CMA’s concerns, we are considering how the transaction might be modified in order to address those concerns in a way that is acceptable to the CMA,” Smith said in a statement.

Previously, Microsoft secured approval for the acquisition in the European Union. Last November, the EU launched an in-depth probe into the deal to determine whether it may hurt the video game market. The bloc’s antitrust officials cleared the transaction this past May after finding it doesn’t pose competition concerns.

Photo: Microsoft