Introduction
Microsoft Corporation (NASDAQ: MSFT) on Wednesday won an appeal in an antitrust case brought against it by the U.S. Department of Justice (DOJ). The case, which dates back to 2001, alleged that Microsoft had abused its monopoly power in the operating system market.
Activision
Activision Blizzard, Inc. is an American video game holding company based in Santa Monica, California. It was founded in July 2008 through the merger of Activision, Inc. (the publicly traded parent company of Activision Publishing) and Vivendi Games. It is traded on the Nasdaq stock exchange under the ticker symbol ATVI, and since 2015 has been a member of the S&P 500 Index. Activision Blizzard currently includes five business units: Activision Publishing, Blizzard Entertainment, King, Major League Gaming, and Activision Blizzard Studios.
The DOJ’s Allegations
The DOJ alleged that Microsoft had committed several antitrust violations, including:
- Bundling its Internet Explorer web browser with its Windows operating system, making it difficult for users to install other browsers.
- Paying computer manufacturers to make it difficult for them to install other operating systems on their computers.
- Using its market power to force computer manufacturers to agree to unfair terms.
Microsoft’s Defense
Microsoft denied the DOJ’s allegations and argued that its actions were necessary to protect its intellectual property and to ensure that its customers had a good experience with its products. The company also argued that the DOJ had failed to prove that its actions had harmed competition.
The Court’s Ruling
The U.S. Court of Appeals for the District of Columbia Circuit ruled in favor of Microsoft, finding that the DOJ had failed to prove that Microsoft’s actions had harmed competition. The court also found that the DOJ had not adequately considered the benefits of Microsoft’s products and services.
The Impact of the Ruling
The ruling is a major victory for Microsoft, which has been under antitrust scrutiny for over two decades. The company has said that the ruling will allow it to focus on innovation and delivering new products and services to its customers.
Activision Blizzard is also likely to benefit from the ruling, as it will make it more difficult for the DOJ to challenge the company’s acquisitions of other video game publishers.
The Implications of the Ruling
The ruling is a significant development in the ongoing debate over antitrust law. The case has been closely watched by businesses and policymakers, who are concerned about the potential for antitrust laws to stifle innovation.
The ruling could have implications for other antitrust cases, including the DOJ’s ongoing investigation into Google. The DOJ is alleged to have abused its monopoly power in the search engine market.
The Stock Market Reaction
The stock market reacted positively to the ruling, with Microsoft’s stock price rising sharply. The stock closed up 6.5% on Wednesday, reaching its highest level in over a year.
The Bollinger bands for Microsoft’s stock price widened after the ruling, indicating increased volatility. After the ruling, the MACD indicator also shifted to a positive position, indicating that the stock has the potential for further gains.
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Technical Analysis
The following technical analysis provides additional insights into the stock market reaction to the ruling from :
- The Bollinger bands are a technical indicator that measures volatility. The bands widen when volatility increases and narrow when volatility decreases. The widening of the Bollinger bands after the ruling suggests that volatility in Microsoft’s stock price is likely to increase in the near term.
- The MACD indicator is a technical indicator that measures momentum. The MACD indicator turned positive after the ruling, which suggests that the momentum in Microsoft’s stock price is likely to be positive in the near term.
Conclusion
The ruling in Microsoft’s favor is a major victory for the company. The stock market reaction to the ruling was positive, with Microsoft’s stock price rising sharply. Technical analysis suggests that volatility in Microsoft’s stock price is likely to increase in the near term, but the momentum in the stock price is likely to be positive.
