Microsoft’s $68.7 billion acquisition of Activision Blizzard faced regulatory hurdles in Europe, the UK and the US. Recent reports suggest that following its announced licensing deals with rivals Nvidia and Nintendo, the company is likely to receive EU antitrust clearance for the deal, along with its defense of the deal. Microsoft’s next stop appears to be the US Federal Trade Commission (FTC), and so it plans to defend its deal.
Why FTC wants to block Microsoft’s Activision purchase
Before we move on to Microsoft’s plan to defend its deal in the US, let’s talk about why the FTC wants to block Microsoft’s purchase of Activision Blizzard.
Last December, the FTC filed a legal challenge to try to block Microsoft’s plan to buy Activision Blizzard over competition concerns and the future of Call of Duty. It argued that the acquisition would “allow Microsoft to crush competitors for its Xbox gaming consoles and its fast-growing subscription content and cloud gaming business.”
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“Microsoft has already demonstrated that it can and will withhold content from its gaming competitors,” Holly Vedova, director of the FTC’s competition bureau, said in a statement.
Microsoft’s Response to FTC Statements
Microsoft submitted a 37-page response addressing the FTC’s concerns. It has been highlighted that Xbox boss Phil Spencer has publicly promised that the Call of Duty franchise – the game in question – will be coming to PlayStation. The company also announced multi-year deals with competitors. Microsoft is preparing a defense to address concerns about the exclusivity of game studios’ offerings, particularly Call of Duty. Microsoft had reportedly requested access to many of Sony’s PlayStation documents in January, the “loudest objection” to the deal.
What are these documents and their meaning?
According to a report, Sony does not want to release these “relevant documents” for PlayStation, which range from the external emails of its antitrust lawyer to a series of documents from the senior vice president and the notes of former employees.
Microsoft is reportedly looking to strengthen its defenses and may not have any more deals to offer its competitors in a bid to convince US regulators that the proposed Activision Blizzard merger would not hurt competition.
Sony hasn’t responded to Microsoft’s 10-year deal, so it intends to use Sony’s documents to bolster its defenses. The company has argued that Sony is a much bigger player than Microsoft in the gaming space and merging with Activision Blizzard wouldn’t hurt competition given the Japanese company’s ability to adapt and compete.
With these documents, she apparently wants to show how much (or how little) the deal would harm her business. There is no clarity as to how Microsoft intends to use these documents.
Order of the FTC
The FTC noted in its order that Microsoft claims it knows Sony Interactive Entertainment (SIE) has exclusivity agreements with publishers to keep their games off Xbox.
“Microsoft argues that the complaint in this case alleges a number of allegations regarding the exclusivity agreements made by developers of high-performance video game consoles with video game publishers. including preventing publishers from putting their games on Xbox’s multi-game subscription service, and that understanding the full scope of SIE’s exclusivity agreements and their impact on industry competitiveness will help in its defense,” read one Explanation.
FTC Chief Administrative Judge D. Michael Chappell has given Microsoft the green light to find out how much Sony is paying publishers to keep games exclusive to PlayStation. However, the judge did not grant permission to access all the documents Microsoft wants.
Microsoft Vice Chairman Brad Smith said in the recent EU hearing that “Sony has 286 exclusive titles and Microsoft only 59 on Xbox”. The EU antitrust authorities have extended their deadline for a decision on Microsoft’s acquisition of Activision to April 25.
