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FTC's appeal of its battle with Microsoft over Activision Blizzard reveals its strategy

The Microsoft and Activision Blizzard logos

We now know the arguments the US Federal Trade Commission will try to make to an appeals court to convince them to overturn Judge Jacqueline Scott Corley's ruling earlier this week. She denied the FTC's request for a preliminary injunction against Microsoft to keep them from acquiring Activision Blizzard before their set deadline of July 18.

In the appeal filing (via The Verge) to the US Ninth Circuit Court of Appeals, the FTC claims the decision had several errors:

  • The Court erred in applying the wrong legal standard to the FTC’s request for a preliminary injunction.
  • The Court Erred as a Matter of Law When It Concluded That Microsoft Was Likely to Foreclose Rivals in the Market for Multigame Subscription Library Services but Found That Asserted Benefits to Microsoft’s Game Pass Customers Outweighed That Foreclosure
  • The Court Erred in Relying on Microsoft’s Offers to and Agreements with Rivals to Find that the FTC Had Failed to Raise Substantial Questions about Incentive
  • The Court’s Partial Foreclosure Analysis Constitutes Reversible Error
  • The Court Misapplied the Law and Ignored the FTC’s Evidence in Evaluating Incentive to Foreclose
  • The Court committed reversible error when it found that the record contains conflicting evidence on the anticompetitive effects of the merger but held that the FTC had not established a likelihood of success on the merits
  • The Court Erred in Balancing the Equities

Microsoft has issued a brief response to the FTC's filing. The company claims the FTC has failed "to provide any basis to expect that it will prevail on a single issue on appeal."

The decision now sits with the judges in the Ninth Circuit Court of Appeals. If they grant the appeal to the FTC and overturn the lower court ruling, that could be the end of Microsoft's plan to buy Activision Blizzard. If it files against the FTC, that could pave the way for the deal to close as soon as this weekend. Indeed, the NASDAQ stock market already plans to delist Activision Blizzard before the start of trading on July 17.

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