Microsoft A response to an antitrust case by U.S. regulators seeking to block the software maker’s takeover of the video game publisher was filed Thursday Activision Blizzardsaying the deal would not harm competition.
The Federal Trade Commission’s challenge to the proposed $68.7 billion acquisition stands out, the biggest government pushback Microsoft has encountered at home since its standoff with the Justice Department over Windows’ dominance of the operating system market two decades ago.
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Under President Donald Trump, Google umbrella company Alphabet, Apple, Amazon and Facebook parent Meta have all faced inquiries from U.S. competition officials. That allowed Microsoft to continue its business and continue to expand its acquisitions through the election of President Joe Biden, even after Lina Khan, a Biden-appointed technology critic, took over the FTC. But then Microsoft revealed plans to acquire Activision Blizzard. On Dec. 8, the FTC argued that the deal would violate federal law.
“Even with full confidence in our case, we remain committed to working with regulators to develop creative solutions to protect competition in the tech industry,” Microsoft President and Vice Chairman Brad Smith said in a statement provided to CNBC. , consumers, and workers.” “As we’ve learned from past litigation, the opportunity to find a deal that benefits everyone never closes.”
To ease government opposition to the deal, Microsoft backed down.
In October, Phil Spencer, chief executive of Microsoft’s gaming division, said Microsoft was committed to bringing Activision Blizzard’s Call of Duty game to Nintendo consoles for a decade and keeping the game on Valve’s Steam game store.Microsoft also offered to sign a 10-year deal with Microsoft sony Call of Duty games release on PlayStation consoles the same day they arrive on Microsoft Xbox consoles. “Sony rejects the deal,” Microsoft said in the filing.
Activision Blizzard doesn’t yet offer its new games through subscription services such as Microsoft’s Game Pass, and the acquisition will make playing Activision Blizzard’s titles more affordable, Microsoft said.
“The acquisition of a game by a third console maker does not upend a highly competitive industry,” Microsoft said in response. “This is especially true when the manufacturer has made it clear that it will not reject a game. Xbox’s main competitor has so far refused.” The fact that Xbox’s offer was accepted does not justify blocking a deal that benefits consumers.”
After spending nearly a year investigating the deal and examining millions of documents from Activision Blizzard and Microsoft, the FTC has provided no evidence that Microsoft is seeking to pull the game franchise from PlayStation, Microsoft said. Ensuring that games are widely available is good for Microsoft’s business, the company said.
Outside the US, Brazil agreed to go ahead with the deal, while the UK has been reviewing it.
Microsoft disputed the FTC’s claims. The FTC said in its lawsuit that Microsoft had promised the European Commission that it would have no incentive to prevent people from playing titles from game publisher ZeniMax, which Microsoft acquired in 2021, on consoles other than the Xbox, but after receiving the approval In the European Commission’s ZeniMax deal, the company said it would exclusively produce some ZeniMax games.
“The European Commission agrees that it has not been misled to publicly state that Microsoft has not made any ‘commitments’ to the European Commission the day after the complaint,” Microsoft said, “nor has the European Commission relied on Microsoft’s future distribution strategy regarding ZeniMax games .”
The case will go to Federal Trade Commission Administrative Law Judge Michael Chappell. Microsoft said the FTC’s process violated Microsoft’s procedural due process rights under the Fifth Amendment to the U.S. Constitution.
The public sent more than 2,100 emails to the Competition and Markets Authority in response to a statement from the agency describing three ways in which the deal could reduce competition. About 75 percent of emails received support for the acquisition, the agency said Wednesday.
Spencer said on a conference call the day the deal was announced that if the deal does go through, Microsoft would become “the third-largest gaming company in the world by revenue, behind only Tencent and Sony.”
In the months since, two groups of Activision Blizzard employees have voted to unionize. Microsoft said it is committed to making it easier for employees to decide whether to join or unionize.
“There is no reasonable, legal reason to prevent our transaction from closing,” Activision Blizzard CEO Bobby Kotick said in a statement provided to CNBC. “Our industry is highly competitive with few barriers to entry. More than ever before, giving players a broad choice of games. Developers big and small have access to engines and tools for free. The breadth of game distribution options has never been wider. We believe we will win on the merits of the case. “
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