Microsoft is headed for a battle with the Federal Trade Commission over whether the US will block the tech giant’s planned acquisition of video game company Activision Blizzard.
Microsoft on Thursday filed a formal response to the FTC’s claims that the $68.7 billion deal is an illegal acquisition that must be stopped.
After years of avoiding political backlash directed at big tech peers like Amazon and Google, the software giant now appears to be on a collision course with US regulators over anti-competitive behavior amid a push by President Joe Biden. Got tough.
The FTC claims the merger could violate antitrust laws by stifling competitors for Microsoft’s Xbox game consoles and its growing Xbox Game Pass subscription business.
At the heart of the dispute is Microsoft’s rivalry with PlayStation-maker Sony to secure popular Activision Blizzard franchises such as military shooter game Call of Duty.
Microsoft’s response to the FTC seeks to downplay Xbox’s role in the industry, describing itself as the “third-place maker of gaming consoles” behind Sony and Nintendo, and among several publishers of popular video games. One of the “has no presence in mobile gaming,” where it is trying to turn a profit.
Activision Blizzard filed its own rebuttal to the FTC complaint on Thursday, criticizing what it described as the FTC’s “unfounded assumption” that Microsoft would want to withdraw Call of Duty from platforms that compete with the Xbox. . Its CEO Bobby Kotick said he believes the companies will prevail.
The controversy could be a tough test case for Biden-appointed FTC chair Leena Khan, who has sought to strengthen enforcement of antitrust rules. The FTC voted 3-1 earlier in December to issue a complaint to block the deal, with Khan and two other Democratic commissioners voting in favor and the only Republican voting against.
The deal is also under close scrutiny in the European Union and the United Kingdom, where investigations are not due to be completed until next year.
The FTC complaint points to Microsoft’s 2021 acquisition of well-known game developer Bethesda Softworks and its parent company ZeniMax as examples of where Microsoft is building some upcoming game titles for Xbox despite European regulators being reassured , He had no intention of doing so.
Microsoft objected to the FTC’s characterization on Thursday, saying it made clear to European regulators that it would “approach exclusivity for future game titles on a case-by-case basis, which it actually did.” Is.”
The FTC’s lawsuit cited best-selling franchises like Call of Duty as important because they develop a base of loyal users attached to their favorite console or streaming service.
The FTC lawsuit states, “With Activision’s control of content, Microsoft will have the ability and an increase in incentive to prevent or reduce Activision’s content that undercuts competition on product quality, value, and innovation.” “This loss of competition will result in significant harm to consumers in many markets at a critical time for the industry.”
Microsoft indicated it would vigorously fight the case in court with a team led by high-profile corporate attorney Beth Wilkinson, while also leaving open the possibility of a settlement.
“Even with the confidence in our case, we remain committed to finding a constructive solution with regulators that will protect competition, consumers and workers in the tech sector,” Microsoft President Brad Smith said in a statement Thursday. “As we’ve learned from our lawsuits in the past, the door is never closed on opportunity to find a settlement that benefits everyone.”
Microsoft’s last major antitrust battle was two decades ago when a federal judge ordered its breakup following the company’s anti-competitive actions related to its flagship Windows software. That ruling was overturned on appeal, although the court imposed other penalties on the company.
Instead of seeking an immediate federal court injunction to stop the merger, its in-house Administrative Law Judge D. Microsoft’s agreement with Activision Blizzard requires that it pay the video game company a breakup fee of up to $3 billion if it cannot close the deal before July 18.
The timing and trajectory of the case could change depending on how UK and Europe regulators rule on the merger next year. If Microsoft wins approval in Europe, it can use it to speed up the process in US courts.
The merger this week faced another challenge from a group of individual video game players, who filed a lawsuit in San Francisco federal court to block the deal on antitrust grounds.
Plaintiff, all fans of Activision Blizzard’s Call of Duty franchise and other popular titles such as World Warcraft, Overwatch and Diablo, in particular, are concerned about how the consolidation will affect future game quality, innovation and output, said their attorney, Joseph Aliotto.
“When there’s a lack of competition, quality necessarily goes down,” Alioto said. “By eliminating Activision, it gives Microsoft such a strong position that they can do whatever they want.”
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(This story has not been edited by News18 staff and is published from a syndicated news agency feed)