By Matt O'Brien, Technology Writer
WASHINGTON (AP) --A U.S. appeals court on Friday rejected a bid by federal regulators to block Microsoft from closing its $68.7 billion deal to buy video game maker Activision Blizzard, paving the way for the completion of the biggest acquisition in tech history after a legal battle over whether it will undermine competition.
In a brief ruling, a three-judge panel on the 9th U.S. Circuit Court of Appeals concluded there were no grounds for issuing an order that would have prevented Microsoft from completing its nearly 18-month-old deal to take over the maker of popular video games such as Call of Duty.
The Redmond, Washington, software maker is facing a potential $3 billion termination fee if the deal isn't completed by Tuesday.
“This brings us another step closer to the finish line in this marathon of global regulatory reviews,” Microsoft President Brad Smith said in a statement.
The appeal filed by the U.S. Federal Trade Commission was a last-ditch effort from antitrust enforcers to halt the merger after another federal judge earlier this week ruled against the agency's attempt to block it. The FTC was seeking an injunction to prevent Microsoft from moving to close the deal as early as this weekend.
The FTC declined to comment on the ruling.
U.S. District Judge Jacqueline Scott Corley's earlier ruling, published Tuesday, said the FTC hadn't shown that the deal would cause substantial harm. She focused, in part, on Microsoft's promises and economic incentive to keep Call of Duty available on rivals to its own Xbox gaming system, such as Sony's PlayStation and Nintendo's Switch.
In its appeal, the FTC argued Corley made “fundamental errors.”
“This case is about more than a single video game and the console hardware to play it,” the FTC said. “It is about the future of the gaming industry. At stake is how future gamers will play and whether the emerging subscription and cloud markets will calcify into concentrated, walled gardens or evolve into open, competitive landscapes.”
The case has been a difficult test for the FTC's stepped-up scrutiny of the tech industry's business practices under its chairperson, Lina Khan, appointed in 2021 by President Joe Biden. Standing legal doctrine has favored mergers between companies that don't directly compete with one another.
Khan came under fire from Republicans at a hearing Thursday in the House of Representatives for the agency’s enforcement record, with one California lawmaker questioning whether the FTC was picking losing fights against mergers on purpose to pressure Congress to update its antitrust laws.
“Absolutely not,” Khan replied, while acknowledging that “unfortunately, things don’t always go our way.”
The FTC's appeal said Corley, herself a Biden nominee, applied the wrong legal standard by effectively requiring its attorneys to prove their full case now rather than in a trial due to start in August before the FTC’s in-house judge.
It was the FTC, however, that had asked Corley for an urgent hearing on its request to block Microsoft and Activision Blizzard from rushing to close the deal. The agency's argument was that if the deal closed now, it would be harder to reverse the merger if it was later found to violate antitrust laws.
In its response to the appeal, Microsoft countered that it could “readily divest” Activision Blizzard later if it had to. It has long defended the deal as good for gaming.
The deal still faces an obstacle in the United Kingdom, though one it now appears closer to surmounting.
British antitrust regulators on Friday extended their deadline to issue a final order on the proposed merger, allowing them to consider Microsoft's “detailed and complex submission” pleading its case.
The Competition and Markets Authority had rejected the deal over fears it would stifle competition for popular game titles in the fast-growing cloud gaming market.
But the U.K. watchdog appears to have softened its position after Corley thwarted U.S. regulators’ efforts to block the deal.
The authority says it has pushed its original deadline back six weeks to Aug. 29 so it could go through Microsoft’s response, which details “material changes in circumstance and special reasons” why regulators shouldn’t issue an order to reject the deal.
AP Technology Writer Michael Liedtke contributed to this story.
Harvey Weinstein hit with new sex crime charge in New York
Harvey Weinstein pleaded not guilty Wednesday to a new sex crime charge in New York, as he awaits retrial in his landmark #MeToo case.
Details of the new allegations were not immediately available. He was charged with committing a criminal sex act.
The jailed ex-movie mogul has long maintained that any sexual activity was consensual.
Prosecutors revealed last week that Weinstein had been indicted on additional sex crime charges that weren't part of the case that led to his now-overturned 2020 conviction. But the new indictment was sealed until his arraignment.
Prosecutors have said that the grand jury heard evidence of up to three alleged assaults — two in hotels in the Tribeca neighborhood and one at a lower Manhattan residential building. The purported incidents took place from the mid-2000s to 2016, prosecutors said.
But it's not clear whether any of those allegations underlie the new indictment.
While bracing for the new charges, Weinstein also is awaiting retrial after New York state's highest court this spring overturned his 2020 conviction on rape and sexual assault charges involving two women. The high court, called the Court of Appeals, ordered a new trial, which is tentatively scheduled to begin Nov. 12.
The Court of Appeals ruled that the then-trial judge unfairly allowed testimony against him based on allegations that were not part of the case. That judge's term expired in 2022, and he is no longer on the bench.
Prosecutors have said they'll seek to fold the new charges into the retrial, but Weinstein's lawyers say it should be a separate case.
Weinstein, who also was convicted in 2022 in a Los Angeles rape case, remains behind bars while awaiting his New York retrial.
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