FTC loses appeals court bid to temporarily block Microsoft-Activision deal

In a victory for Microsoft, the U.S. Appeals Court for the 9th Circuit late on Friday denied the Federal Trade Commission’s motion to temporarily stop Microsoft from closing its $68.7 billion acquisition of video game publisher Activision Blizzard.

Microsoft is still working to resolve concerns about the transaction from the United Kingdom’s Competition and Markets Authority. The two companies have been looking to close the deal by July 18.

A federal judge in San Francisco, after five days of court hearings, ruled against the FTC on Tuesday, and the federal agency filed its appeal on Wednesday.

The FTC first sued to block the acquisition last December, then filed for an emergency injunction to block the completion of the deal before it could have an agency administrative law judge take it up. The FTC has argued that the transaction was anti-competitive because Microsoft might make some of its games exclusive to its own Xbox game consoles or diminish the experience of Activision games such as the popular Call of Duty titles on rival services should the deal close. Microsoft has said it would instead make the games more widely available.

In an emergency motion filed with the 9th Circuit on Thursday, the FTC said the district judge “denied preliminary relief, applying the wrong legal standard: the court effectively required the FTC to prove its full case on the merits with the court as arbiter of the merger’s legality.” The agency requested a temporary injunction while the court considered an appeal of the district court’s conclusion.

Under the leadership of Lina Khan, the FTC has lost other battles with technology companies, including its effort to stop Meta Platforms from buying virtual reality fitness app startup Within.

FTC and Microsoft representatives did not immediately respond to requests for comment on the ruling.