The US Federal Trade Commission (FTC) has filed a lawsuit against Microsoft regarding its $69 billion acquisition of Activision, the maker of the popular video game franchise Call of Duty. The FTC is seeking a preliminary injunction that would temporarily halt the merger while the agency’s in-house court assesses its potential impact on competition in the video game industry.
FTC lawyer James Weingarten stated during the opening arguments of the evidentiary hearing that the combined Microsoft-Activision entity could harm competition in various markets related to consoles, subscription services, and cloud gaming. The FTC argues that if the deal is completed, Microsoft’s Xbox console would have exclusive access to Activision games, effectively excluding other competitors like Nintendo and Sony’s PlayStation.
During the hearing, representatives from Microsoft revealed that PlayStation’s Jim Ryan was aware that the proposed deal with Activision did not involve Xbox exclusives. Microsoft claimed to have bigger plans and the financial capability to make significant moves in the industry. Microsoft also stated that it remains committed to making games available on all platforms, offering Sony a three-year and a ten-year deal, both of which were declined.
David Cuddy, Microsoft’s General Manager of Public Affairs, suggests that Sony’s opposition to the merger is motivated by its desire to maintain its dominant market position. Microsoft has already formed partnerships with various cloud gaming platforms and has entered into a ten-year agreement with Nintendo to provide Xbox and Activision Blizzard games on the Switch.
The acquisition of Activision by Microsoft has faced antitrust challenges globally. While the European Union approved the deal, British competition authorities blocked it. The FTC is concerned that the acquisition could lead to reduced competition and grant Microsoft excessive power in the industry.
The ongoing hearing will include testimonies from the CEOs of Microsoft Gaming, Sony Interactive Entertainment, Microsoft CEO Satya Nadella, and Activision CEO Bobby Kotick.
[Image Source: The Times of India]
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