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Microsoft Wins Appeal Against FTC Challenge to $69 Billion Activision Deal

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Microsoft has secured a major legal victory as the 9th U.S. Circuit Court of Appeals rejected the Federal Trade Commission’s (FTC) bid to revive its antitrust challenge against the tech giant’s $69 billion acquisition of Activision Blizzard, maker of the Call of Duty franchise.

Key Points:

  • Unanimous Ruling: A three-judge panel upheld a lower court decision that denied the FTC’s request for a preliminary injunction. The court found that the FTC failed to demonstrate that the deal would likely harm competition.

  • Deal Closed in 2023: Microsoft finalized the largest-ever gaming acquisition after gaining approvals from regulators including UK authorities, despite scrutiny in multiple global jurisdictions.

  • FTC’s Position: The FTC argued the acquisition would undermine competition in console gaming, subscription services, and cloud gaming, but both the district court and appeals court found these claims lacked sufficient evidence.

  • Impact on FTC Strategy: The ruling is a blow to the FTC’s broader push under President Joe Biden’s administration to ramp up antitrust enforcement in Big Tech. The FTC’s internal administrative proceedings, paused since 2023, remain uncertain.

  • Microsoft’s Next Steps: While Microsoft has not yet commented, the ruling removes a significant legal obstacle and further solidifies its control over Activision’s gaming titles and intellectual property.

Judge Jacqueline Scott Corley had already ruled in 2023 that the acquisition would not “substantially lessen competition,” a standard the appellate court agreed had been correctly applied.

Nintendo Forecasts 15 Million Switch 2 Sales, Sees 13% Profit Rise Despite Tariff Risks

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Nintendo expects to sell 15 million units of its upcoming Switch 2 console in the fiscal year ending March, projecting a 13% increase in operating profit to 320 billion yen ($2.22 billion) amid ongoing global trade tensions.

Key Highlights:

  • Switch 2 Launch: The successor to the original Switch, which sold over 150 million units since 2017, will debut on June 5. It will feature improved graphics and a larger screen.

  • Tariff Concerns: Nintendo paused U.S. pre-orders temporarily due to uncertainty over President Trump’s tariffs, but resumed after deciding to keep the U.S. retail price at $449.99.

  • Profit Outlook: Although Nintendo expects a profit hit in the tens of billions of yen from tariffs, it anticipates a solid rebound from last year’s 46.6% drop in operating profit to 282.5 billion yen.

  • Software Expectations: Nintendo forecasts 45 million Switch 2 software sales, alongside 4.5 million units of the original Switch and 105 million software units for that aging system.

  • Launch Titles: Switch 2 will debut with anticipated games including “Mario Kart World”, expected to boost early adoption.

Market Context:

  • Analysts like Serkan Toto of Kantan Games believe Nintendo’s forecast is conservative, with potential demand pushing sales closer to 20 million units.

  • The Switch 2 arrives as competitors Sony and Microsoft increase their console prices, potentially making Nintendo’s launch more appealing.

Despite ongoing trade war risks and pricing sensitivities, early signs suggest robust demand for Nintendo’s new hardware, which will be crucial for maintaining momentum in a business still heavily reliant on console sales.

Ubisoft Shares Reverse Early Gains Amid Hedge Fund Short Bets and Debt Concerns

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Ubisoft’s stock saw a sharp turnaround on Friday, erasing early gains of up to 12% and slipping into negative territory amid speculation that U.S. hedge funds are shorting the stock. By 14:51 GMT, shares were down around 1%, having earlier dropped as much as 6% after the initial surge.

The volatility followed Ubisoft’s announcement of a major restructuring plan involving the creation of a new subsidiary to consolidate three of its top video game franchises: Assassin’s Creed, Far Cry, and Tom Clancy’s Rainbow Six. The move is designed to unlock value and reduce debt, but market reactions were mixed.

. Tencent Buys In, But Debt Payoff Underwhelms for Some
Chinese tech giant Tencent has agreed to invest €1.16 billion ($1.26 billion) for a 25% stake in the newly created unit, which Ubisoft says is valued at approximately €4 billion. While the deal marks a significant capital injection and strategic partnership, analysts noted that Ubisoft only plans to use €500 million from the deal to pay down its €1.1 billion debt—raising concerns among traders.

Barclays analysts said that if the transaction closes by the end of 2025, Ubisoft’s debt load will become more manageable. However, a trading source cited by an analyst told Reuters that hedge funds are shorting the stock, possibly due to dissatisfaction with the limited debt reduction.

. Mixed Sentiment Despite Long-Term Strategic Potential
Ubisoft framed the restructuring as a step toward greater financial flexibility and operational focus. Broker Midcap Partners commented that the deal “highlights the group’s significant undervaluation” and could pave the way for slimming down other parts of the business.

Still, skepticism remains due to Ubisoft’s broader challenges. The company lost nearly half its market value in 2023 after missing financial targets, facing declining sales, and delaying key game releases.

The Guillemot family, Ubisoft’s founders and majority shareholders, reportedly initiated talks with Tencent last September, signaling a strategic pivot to reinvigorate its game portfolio and investor confidence.

. Market Caution as Deal Timeline Extends to 2025
Although the franchise spinoff could unlock substantial value, the deal’s long timeline—expected to close by the end of 2025—may have contributed to investor wariness. Combined with concerns about the company’s ability to deliver consistent performance across its main titles, some investors may be choosing to take profits or hedge against further downside.