san francisco — The fate of one of the priciest mergers in tech industry history will soon be in the hands of a federal judge who must decide whether to block Microsoft from closing the deal to buy video game company Activision Blizzard.
Federal antitrust promoters have filed a lawsuit to block the $69 billion acquisition, which they say would hurt competition between Microsoft and gaming industry rivals such as Sony and Nintendo.
But Microsoft largely had the upper hand in a 5-day San Francisco federal court hearing that ended Thursday, and it has called on a host of witnesses, including its CEO Satya Nadella and longtime Activision Blizzard CEO Bobby Kotick, to testify in favor of the merger. called other officers.
The Federal Trade Commission, which enforces antitrust laws, has asked US District Judge Jacqueline Scott Corley to issue an injunction that temporarily blocks Microsoft and Microsoft before it is reviewed by the FTC’s in-house judge in an August trial. would prevent Activision from closing the deal.
Both Microsoft and Activision have suggested that such a delay would force them to abandon the deal they signed 17 months ago. Microsoft has promised to pay Activision a breakup fee of $3 billion if the deal is not completed by July 18.
“The relief the FTC seeks is not only unprecedented but it is about to end the deal,” Microsoft chief counsel Beth Wilkinson said in a final written defense filed Thursday.
Sony, the most vocal opponent of the deal in the game industry, has told regulators it fears Microsoft will deprive its flagship PlayStation game console of popular Activision franchises like Call of Duty or those titles to force gamers to abandon PlayStation. will present a poor version of . Microsoft’s Xbox System.
Nadella, Kotick and other Microsoft witnesses tried to allay those concerns this week, arguing that it was better for business to keep games like Call of Duty on multiple platforms and that removing it from PlayStation would lead to gamer backlash.
Amy Hood, Microsoft’s chief financial officer, said in writing, “The possibility of making Call of Duty exclusive to Xbox was never evaluated or discussed with me, nor was it mentioned in any presentation or discussion to the board of directors. ” The testimony was filed ahead of Thursday’s court session. Hood sat in the courtroom on Thursday but was not asked to testify.
But the FTC’s lead attorney in the case, James Weingarten, tried on Thursday to dismiss Microsoft’s claim that it doesn’t care much about making games exclusive. Weingarten questioned a financial executive in Microsoft’s Xbox division about the company’s internal strategy discussions for the Activision Blizzard acquisition, as well as its 2021 purchase of another top game-maker, Zenimax, for $7.5 billion.
Xbox chief financial officer Tim Stuart was asked about the stir when he said at an investor conference in 2020 after first announcing the Zenimax deal that Microsoft’s long-term plan was to make its games “either the same or better”. had to differentiate its platform. or best.”
Stuart confirmed that there had been internal discussions about how making the game exclusive to Xbox could offset the drop in sales with money from selling more Xbox consoles and subscriptions to Microsoft’s Game Pass monthly subscription service. .
Microsoft has since made some of Zenimax’s games, such as the upcoming release Starfield, exclusive to Xbox. But in response to concerns about the Activision deal, Microsoft offered to make binding deals to keep Call of Duty on other platforms for at least ten years. Nintendo agreed to such a deal for its Switch console, while Sony has denied it.
Both Microsoft and the FTC are expected to present their final arguments on Thursday.
The deal also faces opposition from another key regulator, the UK’s Competition and Markets Authority, while other countries and the European Union have approved it.
