Microsoft's Activision Acquisition Should Be Halted: US FTC
The US Federal Trade Commission (FTC) has commenced arguments in federal court for a preliminary injunction to temporarily block Microsoft's planned acquisition of videogame giant Activision Blizzard.
The five-day evidentiary hearing aims to determine whether the proposed USD 69 billion merger between the tech behemoth and the gaming company could harm competition within the industry.
FTC lawyer James Weingarten, presenting the government's opening arguments, voiced concerns over the potential adverse impact of the merger on various markets, including consoles, subscription services, and gaming cloud infrastructure. He said, "If this deal is completed, the combined company... is likely to have the ability, an incentive, to harm competition in various markets related to consoles, subscription services and the cloud (for gaming)."
One of the FTC's primary contentions revolves around Microsoft's Xbox gaining exclusive access to Activision games, potentially leaving competitors such as Nintendo and Sony's PlayStation at a disadvantage. Weingarten's statements indicate that the FTC seeks to prevent the merger from closing until its in-house court assesses the potential anticompetitive effects of the combination on the videogame industry.
Beth Wilkinson, representing Microsoft, countered the FTC's arguments by emphasising that it would be logical for Xbox to make Activision games available on multiple platforms to reach a broader audience. She warned that granting an injunction could lead to a protracted three-year administrative proceeding that would effectively terminate the deal.
Scheduled to testify in the coming days are notable figures from both Microsoft and the gaming industry. These include 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, who will appear via video deposition. Their testimonies are expected to shed light on key aspects of the case.
The resolution of this lawsuit in the United States marks one of several significant antitrust battles that Microsoft and Activision have encountered worldwide in their quest to finalize the merger. While the European Union approved Microsoft's bid in May, British competition authorities thwarted the takeover in April.
The FTC argues that the merger between Microsoft and Activision, which would be the largest in Microsoft's history and a landmark event for the videogame industry, could provide Microsoft with an "ability and increased incentive to withhold or degrade Activision's content in ways that substantially lessen competition."
Microsoft, on the other hand, asserts that the merger would be advantageous for gamers and gaming companies alike. As a gesture to address concerns, the tech giant has offered to sign a legally binding consent decree with the FTC, ensuring that "Call of Duty" games are accessible to rivals for a period of ten years.
The evidentiary hearing, set to continue until 29 June, will feature testimonies from prominent witnesses, including Microsoft CEO Satya Nadella and Activision CEO Bobby Kotick, scheduled for the following week.
