California court gives Microsoft and Activision a reason to celebrate—but their $69 billion deal isn’t a sure thing yet

Judge Jacqueline Scott Corley, who initially granted the FTC a brief temporary restraining order against the deal last month, denied the FTC a more serious preliminary injunction today—and offered some pretty withering reasoning: “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.” In other words, the FTC’s case will fail, so there’s no reason to hold up the acquisition.

Like the European Union’s antitrust regulators, the judge essentially agreed with Microsoft that its concessions will make the deal kosher—most notably, the company has promised to maintain non-Xbox platforms’ access to Activision’s crown jewel, the Call of Duty franchise, for a decade. This will actually increase consumer access to such titles, Corley said.

“We’re grateful to the Court in San Francisco for this quick and thorough decision and hope other jurisdictions will continue working towards a timely resolution,” Microsoft president Brad Smith said in response.

This development makes it far more likely that the acquisition will go ahead, though some pretty big hurdles remain. First is the FTC case, which is still a thing—for now. The agency can appeal Corley’s ruling this week, though it’s not yet clear if it will. FTC spokesperson Douglas Farrar expressed disappointment in today’s decision, promising that “in the coming days we’ll be announcing our next step to continue our fight to preserve competition and protect consumers.”

And then there’s the U.K., whose Competition and Markets Authority blocked the deal in April on the grounds that it could help Microsoft take over a cloud-gaming market that’s currently small, but growing.

Microsoft and Activision appealed that decision and were due a hearing at the Competition Appeal Tribunal later this month, but, in more late-breaking news, the CMA and the companies just agreed to a stay of litigation as the agency considers Microsoft’s proposals for making the deal more CMA-friendly.

The coming days and weeks will provide a clearer picture of the takeover’s prospects, but today’s developments certainly put considerable wind in its sails. Microsoft and Activision have cause to celebrate.

More news below.

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David Meyer

NEWSWORTHY

Google AR churn. A key exec on Google’s augmented reality team has quit. Mark Lucovsky, a former Oculus VR general manager who headed up operating systems for Google’s AR team over the last couple years, blamed “the recent changes in AR leadership and Google’s unstable commitment and vision” for his departure, The Verge reports. The company appears to have given up on AR hardware and is reportedly working on software to run on other companies’ headsets.

Amazon EU challenge. Amazon has sued to avoid being weighed down by the heaviest restrictions under the EU’s new Digital Services Act, which aims to combat illegal content online. Per Reuters, the company has filed a case at the EU’s General Court to challenge its designation as a “Very Large Online Platform,” along with the likes of Facebook and Google. “If the VLOP designation were to be applied to Amazon and not to other large retailers across the EU, Amazon would be unfairly singled out,” said a spokesperson. Actually, Amazon is the second large retailer to make this complaint; the German fashion retailer Zalando beat it by a few weeks.

Holmes sentence shortened. Theranos fraudster Elizabeth Holmes has had her 11-year sentence cut by two years, meaning she should be out of prison at the end of 2032. It’s not clear why her sentence was shortened, the Guardian reports. Her former business partner Sunny Balwani also had two years lopped off his sentence.

SIGNIFICANT FIGURES

87%

— The percentage of classic video games released in the U.S. that are “critically endangered” (i.e. not available in the marketplace) according to the Video Game History Foundation, which writes: “For accessing nearly 9 in 10 classic games, there are few options: seek out and maintain vintage collectible games and hardware, travel across the country to visit a library, or…piracy.”

IN CASE YOU MISSED IT

A.I.’s biggest short, medium, and long-term risks, according to Anthropic CEO Dario Amodei, by Alexei Oreskovic

Top Apple supplier Foxconn just bailed on its $19.4 billion plan to make chips in India, by Nicholas Gordon

Mark Zuckerberg’s Threads app is scooping up millions of Twitter power users—but a culture clash is brewing, by Associated Press

Google wants its A.I. to transform health care next, as it partners with the Mayo Clinic, report says, Rachel Shin

Cloudflare CEO says ‘exclusionary’ culture hurts Utah’s tech status, but admits Mormon missionaries grow up to be great salespeople: ‘you’re selling the toughest thing in the world’, by Kylie Robison

Steve Jobs’ intern went on to sell his company to Google for $625 million—he now advises grads to pay to work for impressive people, by Orianna Rosa Royle

BEFORE YOU GO

Smash room controversy. There is an entire industry of “smash rooms” in the U.S., where people get to vent their frustrations on printers (and other items) Office Space style. However, the Washington Post reports, there are environmental concerns over the metals, gases, and batteries inside such devices, which has led to local bans in places like Los Angeles.

Here’s Peter Wolf, proprietor of L.A.’s Rage Ground, who has had to pivot to plates and furniture: “All these rage rooms are individual small businesses, so it’s really up to each one to find a solution that works for them in terms of getting inventory that’s not electronics for a price that people want to smash and how creative they get in solving that issue. Some will be able to adjust, and others will fail.”