san francisco — Microsoft will try to win approval on Thursday in a legal tussle with US regulators to complete its $69 billion acquisition of video game maker Activision Blizzard, which would be bigger than the movie and music industries combined.
The battle will cap Microsoft’s ambition to expand its video game imprint beyond its Xbox consoles against the US Federal Trade Commission’s bid to block the deal, which it argues is to the detriment of consumers. Will stifle competition and innovation.
This is the latest twist in a deal that was announced 17 months ago. Microsoft CEO Satya Nadella and Activision Blizzard CEO Bobby Kotick are both expected to testify at some point during a five-day hearing before US District Judge Jacqueline Scott Corley in San Francisco, which ends on June 29.
FTC lawyers will call on experts and a top executive from Sony, maker of the industry-leading PlayStation video game console, to show why Microsoft would receive an unfair advantage if it is allowed to mix its Xbox franchise with its Activision acquisition. It is owned by popular video game titles such as Call of Duty, World of Warcraft and Candy Crush.
After all the evidence and arguments have been presented, Corley will decide whether to grant the FTC’s request for a court order, which would put the deal in a holding pattern until a more detailed administrative trial that begins in Washington, D.C., on August 2. Will keep The judge is not expected to pronounce the verdict until after the July 4 vacation.
If Corley refuses to issue an injunction, Microsoft could be forced to close the deal before the July 18 deadline and avoid a $3 billion breakup fee.
The wrangling over the deal highlights the growing importance of video gaming, a pursuit that has already attracted a worldwide audience of nearly 3 billion people who play at least some of the time on consoles, personal computers or, increasingly . , smart fone. The market is expected to reach 4.5 billion people by 2030.
All those gamers willing to pay more than $70 for marquee titles like Call of Duty or fork over a steady stream of recurring subscriptions to services like Microsoft’s Xbox Game Pass, Amazon’s Luna and Nvidia’s GeForce.
Microsoft is framing the proposed Activision deal as a way to make inroads against Sony’s PlayStation, which has a far greater market share, as well as providing new benefits for video game players. Among other things, Microsoft cites Nintendo’s 10-year commitment to making Call of Duty available on its Switch console and willingness to strike a similar decade-long deal with PlayStation, and also argues that video gamers should be able to access its console. Will get more access to even more games. Xbox Subscription Service.
The FTC has objected that the deal would give too much power to Microsoft, which is already one of the world’s richest companies because of a personal computer software empire that the US Justice Department seized more than 20 years ago. Had tried to break in the historical antitrust case. The regulators also allege that Microsoft cannot be trusted to gradually bring the most popular video games to its own Xbox consoles and subscriptions, based on its management of titles after it buys video game maker ZeniMax Media in 2021. Will not make special for services.
The hearings will be another test of the FTC’s oversight of Big Tech, led by Chairperson Leena Khan, who has been vocal about her belief that US regulators have been too lenient in past deals, allowing companies like Amazon, Google and others to grow in power. got help. and Facebook. The court spat with Microsoft comes six months after the FTC took Facebook owner Meta Platforms to court in Silicon Valley for trying to block its acquisition of a virtual reality fitness company, but was rebuffed by the judge in that case. .
The FTC may face challenges in persuading Corley to block the Activision deal. The judge had previously shown skepticism about the need to block the acquisition in March when he dismissed a lawsuit brought by a group of gamers who sued to block the acquisition.
Like regulators, gamers argued that Microsoft’s acquisition of Activision would stifle competition and reduce consumer choice. They later brought an amended suit, but in May Corley denied their request for an injunction to stop the deal.
Another major regulator, the UK’s Competition and Markets Authority, has also taken action to thwart Microsoft’s takeover.
But European regulators representing a group of 27 nations approved the deal last month on the condition that Microsoft make certain promises to foster competition in the cloud-based gaming market. Many other countries including China, Japan, Brazil and South Korea have also approved it.
Microsoft has lodged a strong protest against UK government officials as well as appealing the decision to British regulators standing in its way.
,
AP Technology Writer Matt O’Brien contributed to this story.
