February 6, 2023

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Microsoft responds to FTC’s attempt to block Activision Blizzard deal

Microsoft On Thursday presented her response to the antitrust case of US regulators trying to stop the software maker from buying the video game publisher Activision BlizzardConsidering that the deal will not harm competition.

Federal Trade Commission the challenge To the proposed $68.7 billion acquisition, it stands out as the largest government response Microsoft has dealt with on home soil since it faced off against the Justice Department two decades ago over Windows’ dominance in the operating system market.

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Under President Donald Trump, Alphabet, Apple, Amazon and Google’s Meta subsidiary have faced inquiries from US competition officials. This led Microsoft to pick up their business and continue to expand with it collectibles With the election of President Joe Biden, even after Biden appointed technology critic Lena Khan, took over at FTC. But then Microsoft revealed a plan to purchase 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 has it too Progress 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.

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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.

in a her own response “If Xbox blocks Call of Duty from Sony’s PlayStation or other platforms that compete with Xbox, Xbox will immediately forgo billions of dollars in lost game sales and dispose of a massive portion of the acquisitions that Activision has,” Activision Blizzard said in the FTC lawsuit. I worked hard to attract and keep her.”

Outside the United States, Brazil gave ok In order to go ahead with the deal, while the UK was scrutinizing it.

Activision Blizzard and Microsoft both rejected the FTC’s assertions.

In its lawsuit, the FTC said Microsoft promised the European Commission it would have no motive to stop people from playing games from ZeniMax, the game publisher Microsoft acquired in 2021, on consoles other than the Xbox, but after acquiring to agree to it. In the ZeniMax deal from the European Commission, the company said it would make some ZeniMax games exclusive.

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The European Commission agrees that it has not been misled, publicly declare Microsoft said the day after the complaint that Microsoft had not made any “commitments” to the European Commission, “the European Commission has not relied on any statements made by Microsoft about future distribution strategy with respect to ZeniMax games”.

The case will go before Federal Trade Commission administrative law judge Michael Chappelle. Activision Blizzard and Microsoft both said the FTC’s actions violated their right to due process under the Fifth Amendment to the US Constitution.

Activision Blizzard said in its filing that the FTC “has invented markets for highly manipulated related products — including a ‘high-performance console’ market limited to Xbox and PlayStation, as well as individual markets for multi-game subscriptions and cloud gaming — in an effort to support its conclusion theories of harm.” .

Members of the public have sent over 2,100 emails to the UK Competition and Markets Authority in response to A statment From the agency describes three ways the deal can reduce competition. About 75% of the emails expressed support for the acquisition, according to the agency He said Wednesday.

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 He said He is committed to efforts that will make it easier for employees to decide whether to join or start a union.

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“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 range of options to play games. Engines and tools are freely available to developers large and small. The breadth of distribution options for games has never been more widespread We believe that we will prevail on the merits of the case.”

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