Court Dismisses Gamers Lawsuit Over Microsoft Activision Purchase

Microsoft’s troubled $69 billion acquisition attempt of giant gaming publisher Activision Blizzard received some positive news this week.

On Monday Microsoft won dismissal of a private consumer antitrust lawsuit, but the plaintiffs were given 20 days to refine their legal challenge.

Microsoft had been hit with the lawsuit in December from a group of consumers seeking to halt one of its biggest acquisitions.

Gamer lawsuit

The private lawsuit sought an order to block Microsoft from acquiring Activision. It was filed on behalf of 10 video game players in California, New Mexico and New Jersey.

That lawsuit alleged Microsoft’s $68.7 billion acquisition of Activision Blizzard would unlawfully restrict competition in the video game industry.

Microsoft of course is already facing significant regulatory and competitor pushback over the acquisition.

The UK was the first to voice its concerns, followed by the European Commission.

Then the US Federal Trade Commission (FTC) filed a case seeking to stop Microsoft from completing the largest-ever acquisition in the video-gaming market.

An evidentiary hearing before the FTC is slated for early August.

However under the US legal system, private plaintiffs can still pursue antitrust claims in American court, even while a related federal agency case is pending.

Case dismissed?

But now Reuters has reported that a federal judge in San Francisco ruled that the lawsuit from the gamer plaintiffs “lacks allegations” supporting their claim that the proposed acquisition would harm market competition.

“Plaintiffs’ general allegation that the merger may cause ‘higher prices, less innovation, less creativity, less consumer choice, decreased output, and other potential anticompetitive effects’ is insufficient,” US District Judge Jacqueline Corley reportedly wrote. “Why? How?”

A spokesperson for Microsoft and lawyers for the company did not immediately respond to messages seeking comment.

Meanwhile Joseph Saveri, a lawyer for the plaintiffs, told Reuters they planned to submit an amended lawsuit “with additional factual detail” to “address all of the ways in which the judge indicated we need to allege more.”

Judge Corley also reportedly scrapped a planned hearing on whether to issue a preliminary injunction.

A status hearing is scheduled for 12 April.

Regulatory trouble

Microsoft is having no end of difficulties in pushing through its proposed acquisition of Activision.

Last month the UK’s Competition and Markets Authority (CMA) provisionally concluded that Microsoft’s $68.7 billion acquisition of Activision Blizzard raised competition concerns.

The CMA was the first competition agency in the world to signal its concerns about the deal in July 2022.

It was followed months in November by European competition regulators.

Earlier this month Microsoft told the CMA that it “strongly disagrees with the CMA’s provisional conclusion that the Merger may result in a substantial lessening of competition in console gaming (“Console SLC”) and cloud gaming services (“Cloud Gaming SLC”) in the UK.”

Microsoft said it would license Activision Blizzard’s “Call of Duty” (CoD) to Sony for 10 years to address UK concerns.

Microsoft last month struck a similar deal with Nvidia Corp’s gaming platform, dependent on it getting the go-ahead for the much-contested acquisition.

The CMA however will rule on the deal on 22 April.

Sony however has rejected Microsoft’s proposals, saying the only way to preserve competition in consoles and cloud gaming was to block the deal or subject it to a structural remedy, such as making Microsoft sell Call of Duty.