The U.S. Federal Trade Commission (FTC) made its case on Thursday in federal court, urging for a preliminary injunction to temporarily halt Microsoft’s acquisition of video game giant Activision Blizzard. The government argued that the combined company would possess the ability and incentive to harm competition in various markets related to gaming consoles, subscription services, and cloud gaming.
FTC vs. Microsoft
FTC lawyer James Weingarten presented the opening arguments, stating that if the merger went through, Microsoft’s Xbox console would gain exclusive access to Activision games, leaving competitors such as Nintendo and Sony’s PlayStation at a disadvantage. The FTC insists that the decision on whether the combination negatively impacts competition in the video game industry should be made by its in-house court. Microsoft’s acquisition of Activision Blizzard has received a mixed response from regulators around the world, but the Federal Trade Commission may be its biggest critic.
In response, Microsoft lawyer Beth Wilkinson contended that it would be logical for Xbox to make Activision games available across multiple platforms, emphasizing that doing so would benefit as many players as possible. Wilkinson warned that granting an injunction could lead to a lengthy administrative process that would jeopardize the deal for up to three years.
Key figures from both companies are expected to testify during the hearing. Microsoft Gaming CEO Phil Spencer, senior Microsoft finance director Jamie Lawver, former Google Stadia executive DovZimring, and Sony Interactive Entertainment CEO Jim Ryan, appearing via video deposition, are among those scheduled to present their testimonies.
The Anti-trust Battles
Resolving the FTC lawsuit is just one of the antitrust battles that Microsoft and Activision have encountered worldwide in their efforts to finalize the $69 billion merger. While the European Union approved Microsoft’s acquisition in May, British competition authorities blocked it in April.
The FTC argues that the deal, which would be the largest in Microsoft’s history and the biggest in the video game industry, would grant the company the power and incentive to manipulate or limit Activision’s content in ways that significantly diminish competition.
Microsoft has countered by asserting that the merger would benefit gamers and gaming companies alike. The company has even offered to sign a legally binding consent decree with the FTC, ensuring that “Call of Duty” games would be made available to competitors for the next decade.
The evidentiary hearing, scheduled to continue until June 29, will feature testimonies from additional witnesses, including Microsoft CEO SatyaNadella and Activision CEO Bobby Kotick, in the coming week. The court’s decision will have significant implications for the future of the proposed Microsoft’s acquisition and the gaming industry as a whole.