Judge Jacqueline Scott Corley tossed the case without prejudice, calling it woefully short on detail. Although the antitrust lawsuit suggests Microsoft may break its promise to keep popular games like the Call of Duty franchise available on competing platforms, that possibility isn’t enough, the judge said.
“Why? How?” she wrote. “Is it possible Microsoft will make Activision’s game catalog fully or partially exclusive? Yes. Have plaintiffs alleged facts that make it plausible Microsoft is reasonably likely to do so? Without more factual context, no.”
The ruling late Monday handed a setback to the gamers. But Corley gave them 20 days to file an amended complaint in the US District Court for the Northern District of California with more detail about the video game markets in which they claim the planned transaction would distort competition.
The proposed class action, filed in December, is just one in a wave of challenges confronting the enormous merger, which came on the heels of a high-profile sexual harassment scandal at Activision. Leaders of the game publisher have been accused of fostering a toxic “frat house” workplace culture.
The deal also faces antitrust claims brought by the Federal Trade Commission, scrutiny in Europe, and a shareholder suit on behalf of Activision investors who say the company’s CEO and his cronies—with assistance from an opportunistic Microsoft—engineered the transaction to save their jobs.
Corley acknowledged in a 12-page opinion that Microsoft appears to have previously broken pledges about keeping newly acquired content on rival gameplay and distribution platforms such as the Sony PlayStation. She cited the tech giant’s 2020 acquisition of another game publisher, ZeniMax Media.
But on the whole, the claims are at best “equally consistent” with an inference that Microsoft will keep or break its promises about Activision, and “equality of possibility is insufficient,” the judge said.
“While the allegations support an inference Microsoft is willing to break its public promises, why would it do so as to Call of Duty?” Corley wrote. “The complaint does not allege facts that support a plausible inference it is reasonably probable.”
The judge also rejected part of the case on other grounds, saying the gamers lack standing to claim the merger would have an anticompetitive impact in the labor market for video game developers.
Microsoft is represented by Alston & Bird LLP and Wilkinson Stekloff LLP. Joseph Saveri Law Firm LLP and the Alioto Law Firm are counsel for the gamers.
The case is DeMartini v. Microsoft Corp., N.D. Cal., No. 22-cv-8991, 3/20/23.
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