Thoughts Unboxed

The Ninth Circuit Court of Appeals today denied the Federal Trade Commission's petition seeking injunctive relief against Microsoft. This ruling paves the way for Microsoft to proceed with its acquisition of Activision Blizzard in the near future. Microsoft's President Brad Smith welcomed the swift decision. He said in a statement: We appreciate the Ninth Circuit’s swift response denying the FTC’s motion to further delay the deal. This brings us another step closer to the finish line in this marathon of global regulatory reviews. While the court's ruling is a significant victory for Microsoft, a major obstacle remains in the form of the United Kingdom's Competitions and Markets Authority (CMA), which has already rejected the proposed merger. Citing concerns over potential unfair advantage in the emerging cloud gaming sector, the CMA has been engaged in negotiations with Microsoft to explore alternative terms for the merger. With a deadline of...

The Federal Trade Commission (FTC) was unsuccessful in its attempt to obtain a temporary injunction blocking Microsoft's acquisition of Activision-Blizzard. Federal judge Jacqueline Scott Corley denied the petition earlier this week , allowing Microsoft to proceed with the acquisition by July 18th. There was speculation that the FTC might drop its lawsuit entirely, but surprisingly enough, the FTC is appealing the federal judge's decision and has filed an opposition to the judge's ruling . The FTC has lodged its appeal in the Ninth Circuit Court and is once again seeking to halt the deal. In its appeal, the FTC has claimed the judge made several judgemental mistakes. Various objections raised by the FTC can be summarized as: Aplying an incorrect legal standard to the FTC's request for a preliminary injunction. Making a legal mistake by finding that Microsoft was likely to impede competition in the market for multi-game subscription library servic...

The Federal Trade Commission (FTC) has lost its motion for a preliminary injunction to halt Microsoft's acquisition of Activision-Blizzard. The case involved presentations from both parties over a span of five days, with the federal judge tasked with deciding whether to grant the FTC's request for an emergency injunction to prevent the deal from closing. While the FTC still has the option to file an appeal with the federal appellate court, it remains to be seen whether they will pursue that route or drop the lawsuit entirely. In her decision , Federal Judge Jacqueline Scott Corley stated: 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 i...

Day 1 - June 22nd, 2023 Highlights The first day of the FTC v. Microsoft hearing sparked a heated battle between two gaming giants: PlayStation and Xbox. As the case unfolded, it became apparent that the FTC, seemingly donning the mantle of Sony, the unrivaled leader in the gaming world, was pitted against Microsoft's Xbox, a brand still striving to recover from the infamous Xbox One fiasco nearly a decade ago. FTC's Opening Statement According to James Weingarten, the counsel for the FTC, Activision is responsible for developing some of the most significant video games in the United States, including popular titles like Call of Duty, Diablo, and Overwatch. Weingarten emphasizes that both Microsoft and its competitors require high-quality content, referred to as triple-A, for their gaming consoles. As a result, they not only license Activision's content but also pay a premium for it. Weingarten further asserts that the evidence to be presented by the FTC in the coming days ...

In the cutthroat world of business, companies often aim to strike their rivals where it hurts the most. As Microsoft faces challenges in gaining approval for its acquisition of Activision-Blizzard, Google saw an opportune moment to deliver a potential knockout punch to Microsoft's Azure division, a direct competitor to its own Google Cloud division. Background In March 2022, the Federal Trade Commission (FTC) called for businesses to provide input on the business practices of major cloud providers such as Google Cloud, Microsoft Azure, and Amazon AWS. Recently, Google responded to this call by leveling accusations against Microsoft and Oracle, alleging unfair practices in the cloud industry, CNBC reports. Google's Complaint Against Microsoft Within its complaint, Google specifically targeted Microsoft, claiming that the company, through its dominant Windows Server and Microsoft Office products, creates barriers for clients to explore alternatives to its Azure cloud infrastruct...

On Monday, Reddit experienced an outage coinciding with a protest by thousands of subreddits against the site's new API pricing terms. Reddit attributed the issues to a significant number of subreddits going private, causing expected stability problems. The blackout was resolved by 12:28 PM CT.  The problems began in the morning, affecting Reddit's desktop and mobile sites as well as its native mobile apps. Although some subreddits were accessible during the outage, Reddit.com failed to load. Downdetector recorded around 43,000 user reports of issues at the peak, but the reports have since decreased. A Twitch stream tracking the number of subreddits going private in protest was also affected but has returned to normal. Over 7,900 subreddits have gone private or read-only in response to the API pricing changes, leading apps like Apollo for Reddit to announce their shutdown by the end of the month. The new pricing structure would b...

The Federal Trade Commission (FTC) has requested a preliminary injunction to temporarily halt Microsoft's proposed acquisition of Activision-Blizzard. The FTC has filed a lawsuit to block the merger in December 2022, expressing concerns about the potential negative impact on competition in the gaming industry. FTC fears Microsoft could manipulate Activision's gaming products, such as by restricting availability or increasing prices on other platforms, which would harm competitors like Sony. FTC argues in the complaint: Both a temporary restraining order and a preliminary injunction are necessary because Microsoft and Activision have represented that they may consummate the proposed acquisition at any time. The FTC's temporary injunction attempt aims to prevent Microsoft and Activision from proceeding with the acquisition until the case is fully reviewed. This development comes as the July 18th deadline for the deal appro...

  In an anticipated yet surprise win for Microsoft, EU Regulators have approved the proposed acquisition of Activision-Blizzard by Microsoft. However, it is not a completely free lunch for Microsoft. The regulators have imposed some conditions.  In a nutshell, the regulators found: Microsoft would have no incentive blocking Activision's games from Sony's PS Consoles In a scenario where Microsoft did withdraw Activision's games from PlayStation Console, it would not harm Sony in a significant way Regulators also put certain conditions for the merger to be approved: 10-year commitment for CoD to be on PlayStation Gamers in EU would get a free license for all current and future Activision's Games for the Cloud-Streaming Service of their choice provided they already own the license of those games. Cloud Streaming services would also be given free licenses to stream Activision's Games in EU countries...

  FTC Chair Lina Khan has reiterated her commitment to protecting the future by implementing measures that create obstacles in the present. In a surprising interview with CNBC, Khan briefly discussed the Microsoft-Activision acquisition. She stated:   This matter is currently under active proceedings, so there are limitations to what I can disclose. However, the FTC filed a separate lawsuit to block this deal in early December. The Complaint highlights various concerns the Commission has, particularly in the console market, as well as the expanding and evolving cloud and subscription markets.   The Complaint focuses on multiple markets, including those that are still experiencing rapid growth and development.   We have witnessed time and again how these emerging markets require enforcers to prioritize safeguarding competition and innovation, ensuring incumbents do not stifle competition and innovation.   Considering the FTC's decision to exclude Nintendo from wh...