Microsoft responds to FTC lawsuit seeking to block Activision Blizzard deal

Microsoft On Thursday, it submitted its response to an antitrust case to US regulators in a bid to stop the software maker from buying the video game publisher. Activision BlizzardConsidering that the deal will not harm competition.

The FTC’s challenge to the proposed $68.7 billion acquisition stands out as the largest government response Microsoft has handled on home soil since it faced off against the Justice Department two decades ago over Windows’ dominance in the operating system market.

Related investment news

Under President Donald Trump, Alphabet, Apple, Amazon and Google’s Meta subsidiary have faced inquiries from US competition officials. This led to Microsoft going after its business and continuing to expand acquisitions through the election of President Joe Biden, even after Biden appointed technology critic Lena Khan to the FTC. But then Microsoft revealed its plan to buy Activision Blizzard. On December 8, the Federal Trade Commission argued that the transaction would violate federal law.

“Even with confidence in our cause, we remain committed to creative solutions with regulators that will protect competition, consumers, and those in the technology sector,” Brad Smith, Microsoft’s president and vice president, said in a statement provided to CNBC. “As we have learned from lawsuits in the past, the door is never closed to the opportunity to find an agreement that can benefit everyone.”

To mitigate government opposition to the deal, Microsoft made concessions.

In October, Microsoft’s chief console chief Phil Spencer said Microsoft had committed to bringing Activision Blizzard’s Call of Duty games to Nintendo consoles for a decade and keeping the games on Valve’s Steam game store. Microsoft also offered to sign a 10-year agreement with Sony Call of Duty games are released on PlayStation consoles the same day they arrive on Microsoft Xbox consoles. “Sony refuses to deal,” Microsoft said in its filing.

Microsoft said that Activision Blizzard did not make its new games available through subscription services such as Microsoft Game Pass, and that the acquisition would make Activision Blizzard games more expensive to play.

“The acquisition of a single game by the third-place console manufacturer cannot upend a highly competitive industry,” Microsoft said in its response. “This is particularly the case when the manufacturer has made it clear that it will not block the game. The fact that Xbox’s dominant competitor has so far refused to accept Xbox’s proposal does not justify blocking a deal that would benefit consumers.”

Microsoft said that after spending nearly a year investigating the deal and examining millions of documents from Activision Blizzard and Microsoft, the FTC has shown no evidence that Microsoft is looking to pull the game series from PlayStation. The company said ensuring games are widely available is good for Microsoft’s business.

Outside the US, Brazil agreed to go ahead with the deal, while the UK was scrutinizing it.

Microsoft retracted the FTC’s assertion.

For example, the FTC said in its lawsuit that Microsoft promised the European Commission that it would have no motive to prevent people from playing games from ZeniMax, the game publisher that Microsoft acquired in 2021, on consoles other than the Xbox. , but then after receiving approval from the European Commission for the ZeniMax deal, the company said it would make some ZeniMax games exclusive.

“The European Commission agreed that it was not misled, publicly announcing the day after the complaint that Microsoft had not made any ‘commitments’ to the European Commission,” Microsoft said. The European Commission also did not rely on any statements made by Microsoft about future distribution strategy related to ZeniMax games. . ”

Members of the public sent more than 2,100 emails to the UK’s Competition and Markets Authority in response to a statement from the agency describing three ways the deal could reduce competition. On Wednesday, the agency said about 75% of emails expressed support for the acquisition.

If the deal goes through, Microsoft will be “the number three gaming company in the world by revenue, after Tencent and Sony,” Spencer said on a conference call the day the deal was announced.

In the months that followed, two groups of Activision Blizzard employees voted to unionize. Microsoft said it is committed to efforts that make it easier for employees to decide whether to join or start a union.

“There is no reasonable and legitimate reason why our deal should not be closed,” Activision Blizzard CEO Bobby Kotick said in a statement provided to CNBC. “Our industry has tremendous competition and few barriers to entry. We’ve seen more devices than ever before give gamers a wide variety of options to play games. Engines and tools are freely available to developers big and small. The breadth of distribution options for games has never been more widespread. He went on. We believe that we will prevail on the merits of the case.”

This is breaking news. . Please check back for updates

Watch: Games would benefit from being largely platform-neutral, Coin Dog Kreutz says