FTC commissioner Lina Khan about to put rack up another loss.
The flag of the Federal Trade Commission.

Surprising many, the Federal Trade Commission (FTC) has actually decided to appeal a recent US federal court order that went in Microsoft's favor on July 11. That initial ruling, handed down by Judge Jacqueline Scott Corley, opened the doors for Microsoft to go ahead with their acquisition of Activision Blizzard.

As part of Tuesday's ruling, Judge Corley said, "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." She continues, "To the contrary, the record evidence points to more consumer access to Call of Duty and other Activision content."

Had that preliminary injunction gone in favor of the FTC, Microsoft would have been temporarily blocked from closing the deal to acquire Activision Blizzard. The block would have only been lifted only after the FTC's own case against Microsoft was resolved, which won't even begin until August 2nd.

The FTC now has to get the Ninth Circuit Court of Appeals to issue an emergency stay to extend a temporary restraining order that is set to expire on July 14, 2023 at 11:59PM (PT). The Court of Appeals, meanwhile, may not even be able to rule on this before the deal deadline is up on July 18th. This could, theoretically, allow Microsoft to close out the deal early next week before that temporary restraining order can even be decided.

Several statements from Microsoft and Activision Blizzard were shared with The Verge and on Twitter.

“The District Court’s ruling makes crystal clear that this acquisition is good for both competition and consumers,” Brad Smith, Microsoft’s vice chair and president, said in a statement to The Verge. “We’re disappointed that the FTC is continuing to pursue what has become a demonstrably weak case, and we will oppose further efforts to delay the ability to move forward.”

“The facts haven’t changed,” tweeted Lulu Cheng Meservey, Activision Blizzard’s CCO and EVP of corporate affairs. “We’re confident the US will remain among the 39 countries where the merger can close. We look forward to reinforcing the strength of our case in court — again.”

Mike Ybarra, the president of Blizzard Entertainment, quipped about the appeal on Twitter. “Your tax dollars at work,” Ybarra said.
To many, this appeal comes off as a desperate move from the FTC and commissioner Lina Khan. The FTC under Khan's leadership has yet to stop any major mergers from happening, especially in the technology industry. With Tuesday's loss to Microsoft, Khan's FTC continued its losing streak against tech giants just this year alone. In February, the FTC had tried unsuccessfully to block Meta's acquisition of VR company Within.

Microsoft still also needs to overcome the hurdle that is approval from the UK's Competition and Markets Authority (CMA). The CMA blocked approval of the deal in April, with Microsoft quickly appealing that decision shortly after. Microsoft and Activision Blizzard could opt to extend the merger agreement to deal with the added time needed in their CMA appeal. However, the CMA said on Wednesday, July 12th, that any restructuring of the deal could "lead to a new merger investigation."

Should Microsoft extend the merger agreement, this would give more time for the FTC to get that restraining order approved. That would be in addition to the CMA's thread to launch a new investigation.

If you thought this was close to being over with, you thought wrong. That is assuming Microsoft doesn't just go ahead and seal the deal on Monday or Tuesday and give the finger to both the FTC and CMA. Who knows, they might just do it at this point.