The US Federal Trade Commission is seeking a preliminary injunction from federal court to temporarily block Microsoft’s acquisition of videogame maker Activision Blizzard. The FTC argues that if the deal goes through, the combined company would likely have the ability and incentive to harm competition in various markets related to consoles, subscription services, and gaming in the cloud. The government’s opening arguments were presented by FTC lawyer James Weingarten on the first day of a five-day evidentiary hearing.
The FTC asserts that Microsoft’s acquisition of Activision Blizzard should be put on hold until the agency’s in-house court can rule on whether the combination negatively impacts competition in the videogame industry. Specifically, the FTC argues that the merger would grant Microsoft’s Xbox videogame console exclusive access to Activision games, sidelining competing consoles from Nintendo and Sony’s PlayStation.
Microsoft’s lawyer, Beth Wilkinson, countered the FTC’s claims by stating in her opening arguments that it makes sense for Xbox to make Activision games available to as many people on as many platforms as possible. Wilkinson also cautioned that granting an injunction could result in a lengthy administrative proceeding that would prevent the deal from happening.
Testimony from Microsoft Gaming CEO Phil Spencer, senior Microsoft finance director Jamie Lawver, former director of product management for Google’s now-defunct Stadia cloud gaming service Dov Zimring, and Sony Interactive Entertainment CEO Jim Ryan, via video deposition, is scheduled for Friday.
The resolution of the US lawsuit is one of several antitrust battles Microsoft and Activision have faced globally in their quest to finalize the deal. While the European Union approved Microsoft’s bid to acquire the Call of Duty videogame maker in May, British competition authorities blocked the takeover in April.
The FTC contends that the merger, being the largest in Microsoft’s history and the biggest in the videogame industry, would grant Microsoft the ability and increased incentive to withhold or degrade Activision’s content in ways that significantly diminish competition.
Microsoft argues that the deal would benefit gamers and gaming companies alike and has offered to sign a legally binding consent decree with the FTC, ensuring that Call of Duty games are provided to rivals for the next decade.
The hearing will continue until June 29, with Microsoft CEO Satya Nadella and Activision CEO Bobby Kotick among the witnesses for next week.
© Thomson Reuters 2023
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