Update: Microsoft president Brad Smith announced a “stay of litigation” with UK regulator the CMA in a rapidly developing story. On July 28, the CAT was scheduled to hear an appeal, but it appears the parties will try to reach a compromise.

Smith said, “After today’s court decision in the US, our focus now turns back to the UK. We disagree with the CMA’s concerns, but we’re considering how to modify the transaction to satisfy them.”

“In order to prioritise work on these proposals, Microsoft and Activision have agreed with the CMA that a stay of the litigation in the UK would be in the public interest and the parties have made a joint submission to the Competition Appeal Tribunal,” he said.

Original Article: After the Federal Trade Commission sought a preliminary injunction to block Microsoft’s $69 billion acquisition of Activision Blizzard, the trillion dollar titan defeated the antitrust organization in court today.

After five days of testimony from Microsoft and the FTC, Judge Jacqueline Scott Corley ruled in favor of letting Redmond finish the deal before the 18th July deadline. Microsoft faces major obstacles in the UK, where the Competition and Markets Authority has blocked the deal.

Judge Corley stated:

Microsoft’s acquisition of Activision has been described as the largest in tech history. It deserves scrutiny. That scrutiny has paid off: Microsoft has committed in writing, in public, and in court to keep Call of Duty on PlayStation for 10 years on parity with Xbox. It made an agreement with Nintendo to bring Call of Duty to Switch. And it entered several agreements to for the first time bring Activision’s content to several cloud gaming services. This Court’s responsibility in this case is narrow. It is to decide if, notwithstanding these current circumstances, the merger should be halted – perhaps even terminated – pending resolution of the FTC administrative action. For the reasons explained, 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. The motion for a preliminary injunction is therefore DENIED.

“Evidence showed the Activision Blizzard deal is good for the industry,” Xbox boss Phil Spencer tweeted. Microsoft’s commitment to “bringing more games to more people on more devices has only grown”:

2/Since we first announced this deal, our commitment to bringing more games to more people on more devices has only grown. We’ve signed multiple agreements to make Activision Blizzard’s games, Xbox first party games and Game Pass all available to more players than they are today.

— Phil Spencer (@XboxP3) July 11, 2023

Xbox must decide whether to close the deal without CMA approval or negotiate a remedy with the British regulator. Microsoft appealed to the Competition Appeal Tribunal to get the CMA to reconsider, and a hearing will begin on July 28th, after the deadline.

The FTC has three days to appeal the above decision, but commentators noted it didn’t when it tried to block Meta’s acquisition of VR developer Within. Thus, this story still has a lot of mileage, but with the FTC faltering and the European Commission already approving the deal, the UK regulator is under pressure.