| FTC v. Microsoft | |
|---|---|
 | |
| Court | United States Court of Appeals for the Ninth Circuit |
| Full case name | Federal Trade Commission v. Microsoft Corp. and Activision Blizzard, Inc. |
| Argued | December 6, 2023 |
| Court membership | |
| Judges sitting | Daniel P. Collins,Danielle J. Forrest,Jennifer Sung |
Federal Trade Commission v. Microsoft Corp. and Activision Blizzard, Inc. was a lawsuit brought against multinational technology corporationMicrosoft and video game holding companyActivision Blizzard in 2022. TheFederal Trade Commission (FTC) sought a temporaryinjunction against Microsoft in its effort toacquire Activision Blizzard.
In July 2021,The Wall Street Journal alleged that Activision Blizzard CEOBobby Kotick engaged in workplace misconduct. Several days later, Microsoft discussed acquiring the company; in March 2021, Microsoft acquiredZeniMax Media forUS$7.5 billion. In January 2022, Microsoft announced its intention to acquire Activision Blizzard. The deal would make Microsoft the third-largest gaming company by revenue, raisingantitrust concerns. The FTC began reviewing the deal later that month and voted to file a legal challenge to stop Microsoft from acquiring the company in December 2022. Atemporary restraining order andpreliminary injunction were requested before judgeJacqueline Scott Corley in June 2023. Corley rejected the preliminary injunction on July 11, and the FTC appealed the ruling a day later to theCourt of Appeals for the Ninth Circuit. The Ninth Circuit denied granting the FTC a preliminary injunction in May 2025, shortly followed by the FTC dropping the case that same month.
The injunction presented a threat to the acquisition and would have halted it if granted in higher courts.FTC v. Microsoft is regarded as Microsoft's largest legal challenge sinceUnited States v. Microsoft Corp. (2001).[1]
On January 18, 2022, Microsoft announced its intention toacquire Activision Blizzard forUS$68.7 billion, following the company's acquisition ofZeniMax Media forUS$7.5 billion in March 2021 and amida workplace misconduct lawsuit filed against the company by theCalifornia Department of Fair Employment and Housing. According toSecurities and Exchange Commission (SEC) filings,Xbox headPhil Spencer discussed acquiring Activision Blizzard days afterThe Wall Street Journal released its report on Activision Blizzard CEOBobby Kotick's behavior at the company.[2] The deal, which would add many of Activision Blizzard's franchises to Microsoft's subscription serviceXbox Game Pass, would make Microsoft the third-largest gaming company by revenue behind Chinese multinational technology companyTencent and Japanese multinational conglomerateSony.[3]Call of Duty, an Activision Blizzard franchise, would remain on Sony'sPlayStation platform for at least three more games, according toBloomberg News'sJason Schreier; at the time, the games remaining on PlayStation includedCall of Duty: Modern Warfare II (2022),Call of Duty: Warzone 2.0 (2022), andTreyarch's forthcomingCall of Duty game in the main series.[4] Following Schreier's report, Microsoft assured customers that it will keep Activision Blizzard's titles on PlayStation beyond Activision Blizzard's existing agreement with PlayStation, despite makingZeniMax Media'sRedfall andStarfield (2023) exclusive toWindows andXbox.[5]
Microsoft's intent to acquire Activision Blizzard raised potentialantitrust concerns both within the United States and abroad. TheFederal Trade Commission (FTC) said it would review the deal on January 31; although acquisitions are usually reviewed by theDepartment of Justice, the FTC has begun a push into regulatingBig Tech.[6] SenatorsElizabeth Warren,Bernie Sanders,Sheldon Whitehouse, andCory Booker—noted opponents of Big Tech—urged FTC chairwomanLina Khan to investigate the acquisition.[7] In September 2022, theUnited Kingdom'sCompetition and Markets Authority signaled it would investigate Microsoft if the company could not answer its concerns. In a blog post, Spencer cited Microsoft's acquisition ofMojang Studios, the developers ofMinecraft (2011), forUS$2.5 billion in 2014 as a testament to the company's approach to releasing games on multiple platforms.[8] TheEuropean Commission began a provision review later that month and opened an "in-depth investigation" in November.[9]
On October 13, 2023, afterreceiving approval from most international regulatory bodies, Microsoft closed the deal to acquire Activision Blizzard.[10] Despite the closure the FTC has continued their litigation, and if successful could require concessions or asettlement from Microsoft.[11]
On December 8, 2022, the FTC voted to file a legal challenge to block Microsoft's acquisition of Activision Blizzard. In the lawsuit, the FTC alleges that Microsoft would use its Xbox gaming consoles, Xbox Game Pass, andXbox Cloud Gaming to suppress competitors, a view point shared by FTC Bureau of Competition director Holly Vedova. Microsoft president and vice chairmanBrad Smith asserted that the company has "complete confidence" in its case and welcomes the "opportunity to present it in court". Vice president of communications Frank X. Shaw tweeted a link to a document entitled, "Get The Facts: How Microsoft is Committed to Growing Gaming Communities".[12] Microsoft responded to the challenge with a filing that claimed that the FTC was unconstitutional, salvo that was later removed.[13] The FTC followed their challenge up with a request for atemporary restraining order andpreliminary injunction before judgeJacqueline Scott Corley on June 12, 2023, amid concerns that Microsoft may close the deal regardless with approval from the European Commission on July 18. The injunction prevents Microsoft from completing its acquisition of Activision Blizzard until the result of the FTC's legal challenge; an evidentiary hearing for that case was set for August 2.[14]
On July 18, twenty-twoRepublicans in theHouse of Representatives sent a letter urging the FTC to drop the case.[15] Two days later, the FTC withdrew its lawsuit.[16] The FTC announced it was resuming the case in September 2023. Arguments before the Ninth Circuit Court began on December 6, 2023, before judgesDaniel P. Collins,Danielle J. Forrest, andJennifer Sung.[17]
Microsoft's exhibit list for the injunction case included several documents, including emails between Spencer andSony Interactive Entertainment president Jim Ryan,Xbox Game Studios head Matt Booty discussing Xbox games for theNintendo Switch, and Xbox leadership discussing "pettiness from Sony andGamespots [sic] fanboy reviewers".[18] In his deposition, Ryan stated that Sony would not share details about its forthcoming video game console with a Microsoft-owned Activision Blizzard.[19] The injunction case began on June 23, 2023. On the first day, the FTC questioned Xbox's ability toport theCall of Duty franchise onto the Nintendo Switch, arguing that technical limitations would make the series' games separate. In a 2021 email, Booty objected toNvidia putting Xbox Game Studios games onto itsGeForce Now streaming service with Microsoft's permission. Upon acquiringBethesda Softworks, he recommended pulling Bethesda's games from GeForce Now; earlier in June, Microsoft signed a deal with Nvidia to bring Xbox games onto the service. Bethesda head of global publishing Pete Hines was questioned for an interview withGameSpot in which he was "bothered" byStarfield's exclusivity. Hines revealed that an upcomingIndiana Jones game fromMachineGames would be exclusive to Windows and Xbox, altering a contract withDisney.[20]
On the second day, Spencer emphasized that Xbox has lost theconsole war to Sony andNintendo. The FTC focused on Xbox exclusives; Spencer refused to confirm whether or notThe Elder Scrolls VI would be available on PlayStation but revealed that Microsoft acquired Bethesda after learning thatStarfield would be a PlayStation exclusive. It was also revealed that Microsoft considered makingMinecraft Dungeons (2021) an exclusive but ultimately decided against it. Under oath, Spencer testified thatCall of Duty will remain on PlayStation for the next ten years and asked him about theDiablo franchise. FormerGoogle Stadia product lead Dov Zimring appeared.[21] The third day marked a series of video depositions livestreamed throughZoom. Ryan contended that Nintendo operates in a different market and that Bethesda's games were multiplatform before the company was acquired. An email shared by PlayStation includes a list of Activision Blizzard games that would remain on PlayStation. The list mentionsOverwatch (2016) but notOverwatch 2 (2022), the former of which no longer exists in place of the latter. Robin Lee, a professor of economics atHarvard University, stated that Xbox's market share would increase nearly ten percentage points ifCall of Duty was an Xbox exclusive; Elizabeth Bailey argued thatCall of Duty is "not a unicorn".[22] Microsoft CEOSatya Nadella said he has "no love" for exclusives and Kotick stated that exclusives are "very detrimental" for business. Collectively, Nadella, Kotick, and Spencer argued that exclusives such asFinal Fantasy XVI (2023) force Xbox into making exclusives.[23]
During the injunction case, both Sony and Microsoft revealed highly confidential information. One email seen byThe Verge shows that Xbox was willing to acquireBungie[a]—now owned by Sony—andSega to bolster Xbox Game Pass.Hitman developerIO Interactive was also on Microsoft's "final watchlist" for companies to acquire in 2021.[24] IO Interactive's upcoming fantasy game will be an Xbox exclusive.[25] Microsoft lawyerBeth Wilkinson revealed thatThe Elder Scrolls VI has a projected release date of 2026.[26] An unredacted document showed thatMicrosoft Azure made less than half of the revenue than its rival,Amazon Web Services, in 2022.[27] Documents submitted by Sony appeared to have been redacted using a blackSharpie but, upon being scanned in, the redacted figures were legible, revealing development cost figures. In contending thatCall of Duty did not have an impact on the company's revenue, Sony revealed that approximately one million players exclusively playCall of Duty on PlayStation; the series as a whole is valued atUS$15.9 billion, according to one document.[28] Similarly, an FTC lawyer accidentally revealed Xbox's revenue split and the FTC's counsel stated that Microsoft was working on a dedicated version of Xbox Cloud Gaming to undermine the argument that it was intended to be a feature.[20] Microsoft uploaded hundreds of internal documents to the District Court for the Northern District of California's website. The documents include an email statingThe Elder Scrolls VI would release in 2026 exclusively on Windows and Xbox.[29]
On July 11, 2023, Corley ruled against FTC and denied the motion for a preliminary injunction, arguing that Microsoft had made a commitment to keepingCall of Duty on PlayStation. A spokesman for the FTC stated that they were disappointed by the ruling and would announce their next steps in the coming days. Smith called the decision "quick and thorough".[30] The FTC was given the opportunity to appeal the ruling until July 14;[31] the agency appealed it a day later.[32] The FTC also filed a separate motion to Corley on July 13 arguing for another injunction until the Ninth Circuit had time to decide to stay Corley's previous ruling, but she denied that motion.[33] The Ninth Circuit denied the emergency appeal to block the merger on July 14.[34] The FTC appealed the decision to theCourt of Appeals for the Ninth Circuit. Over three dozen venture capital firms and investors openly opposed the appeal in a letter.[35]
The FTC filed a complaint about layoffs inMicrosoft Gaming on February 7, 2024,[36] and intended pricing changes toXbox Game Pass on July 18.[37]
The Ninth Circuit ruled on May 7, 2025, to deny the FTC's request for an injunction.[38] With the denial, the FTC dropped the case on May 22, 2025.[39]
InThe Hill, conservative journalist Stephen Kent criticized Federal Trade Commission chairLina Khan and praised Microsoft.[40]The Washington Post's editorial board said that the FTC should allow the deal to proceed, but include aconsent decree that permits the agency to make any Activision Blizzard titlesmultiplatform under their discretion.[41]The New York Times viewed the case as Microsoft's "biggest challenge in Washington in two decades", referring toUnited States v. Microsoft Corp. (2001), and noted Khan's efforts to regulateBig Tech.[1] The injunction ruling presented a failure for Khan and emboldened critics.[42]
