Microsoft will fight US over $68.7B Activision Blizzard deal

Dec 22, 2022, 3:25 AM | Updated: 7:23 pm
FILE - The Activision Blizzard Booth during the Electronic Entertainment Expo in Los Angeles, June ...

FILE - The Activision Blizzard Booth during the Electronic Entertainment Expo in Los Angeles, June 13, 2013. Microsoft is headed for a battle with the Federal Trade Commission, filing a formal challenge Thursday, Dec. 22, 2022, over whether the U.S. will block the tech giant's planned takeover of video game company Activision Blizzard. (AP Photo/Jae C. Hong, File)

(AP Photo/Jae C. Hong, File)

Microsoft is headed for a battle with the Federal Trade Commission over whether the U.S. will block the tech giant’s planned takeover of video game company Activision Blizzard.

Microsoft on Thursday filed a formal response to the FTC’s claims that the $68.7 billion deal is an illegal acquisition that should be stopped.

After years of avoiding the political backlash that has been directed at big tech peers such as Amazon and Google, the software giant now appears to be on a collision course with U.S. regulators emboldened by President Joe Biden’s push to get tough on anti-competitive behavior.

The FTC claims the merger could violate antitrust laws by suppressing competitors to Microsoft’s Xbox game console and its growing Xbox Game Pass subscription business.

At the center of the dispute is Microsoft’s rivalry with PlayStation-maker Sony to secure popular Activision Blizzard franchises like the military shooter game Call of Duty.

Microsoft’s response to the FTC tries to downplay Xbox’s role in the industry, describing itself as the “third-place manufacturer of gaming consoles” behind Sony and Nintendo, and one of just many publishers of popular video games with “next to no presence in mobile gaming,” where it is trying to make gains.

Activision Blizzard filed its own rebuttal to the FTC complaint on Thursday criticizing what it described as the FTC’s “unfounded assumption” that Microsoft would want to withhold Call of Duty from platforms that compete with Xbox. Its CEO Bobby Kotick said he believes the companies will prevail.

The dispute could be a difficult test case for Biden-appointed FTC Chair Lina Khan, who has sought to strengthen enforcement of antitrust rules. The FTC voted 3-1 earlier in December to issue the complaint seeking to block the deal, with Khan and the two other Democratic commissioners voting in favor and the sole Republican voting against.

The deal is also under close scrutiny in the European Union and the United Kingdom, where investigations aren’t due to be completed until next year.

The FTC’s complaint points to Microsoft’s 2021 acquisition of well-known game developer Bethesda Softworks and its parent company ZeniMax, as an example of where Microsoft is making some upcoming game titles exclusive to Xbox despite assuring European regulators it had no intention to do so.

Microsoft on Thursday objected to the FTC’s characterization, saying it made clear to European regulators it would “approach exclusivity for future game titles on a case-by-case basis, which is exactly what it has done.”

The FTC’s suit describes top-selling franchises like Call of Duty as important because they develop a base of loyal users attached to their preferred console or streaming service.

“With control of Activision’s content, Microsoft would have the ability and increased incentive to withhold or degrade Activision’s content in ways that substantially lessen competition — including competition on product quality, price, and innovation,” the FTC lawsuit says. “This loss of competition would likely result in significant harm to consumers in multiple markets at a pivotal time for the industry.”

Microsoft signaled that it will vigorously fight the case in court with a team led by high-profile corporate attorney Beth Wilkinson, while also leaving open the possibility of a settlement.

“Even with confidence in our case, we remain committed to creative solutions with regulators that will protect competition, consumers, and workers in the tech sector,” said Microsoft’s president, Brad Smith, in a statement Thursday. “As we’ve learned from our lawsuits in the past, the door never closes on the opportunity to find an agreement that can benefit everyone.”

Microsoft’s last big antitrust battle occurred more than two decades ago when a federal judge ordered its breakup following the company’s anticompetitive actions related to its dominant Windows software. That verdict was overturned on appeal, although the court imposed other penalties on the company.

The FTC’s decision to send the complaint to its in-house Administrative Law Judge D. Michael Chappell instead of seeking an urgent federal court injunction to halt the merger could drag the case out at least until August, when the first evidence hearing is scheduled. Microsoft’s agreement with Activision Blizzard requires it to pay the video game company a breakup fee of up to $3 billion if it can’t close the deal before July 18.

The timing and trajectory of the case could change depending on how regulators in the U.K. and Europe rule on the merger next year. If Microsoft wins approval in Europe, it could use that to try to expedite the process in U.S. courts.

The merger faced yet another challenge this week from a group of individual video game players who sued in a San Francisco federal court to stop the deal on antitrust grounds.

The plaintiffs, all fans of Activision Blizzard’s Call of Duty franchise and other popular titles such as World of Warcraft, Overwatch and Diablo, are particularly concerned about how the consolidation would affect future game quality, innovation and output, said their attorney Joseph Alioto.

“When there’s a lack of competition, the quality necessarily goes down,” Alioto said. “By eliminating Activision, it gives such a strong position to Microsoft that they can do whatever they want.”

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Associated Press

Police: Bus overturns in Slovenia, killing 3, injuring more

LJUBLJANA, Slovenia (AP) — A bus overturned early Friday in northeastern Slovenia, killing three people and injuring several, police said. The accident happened around 5 a.m. near the town of Murska Sobota, police said in a statement. They said an investigation is underway to determine the cause of the crash. Local media said the bus […]
1 day ago
FILE - A view of the German consulate in Istanbul, on June 2, 2016. Turkey has slammed a group of W...
Associated Press

Turkey says West failed to share details of security threat

ANKARA, Turkey (AP) — Turkey for a second day on Friday railed against a group of Western countries that temporarily shut their consulates in Istanbul, accusing them of failing to share information on the security threat that led to the closures and of aiming to cause harm to Turkey. This week, nine Western nations either […]
1 day ago
Ukrainian State Emergency Service firefighters put out a fire after Russian shelling hit a shopping...
Associated Press

EU officials hold Kyiv talks in show of support for Ukraine

KYIV, Ukraine (AP) — Top European Union officials were due to meet Friday in Kyiv with Ukrainian President Volodymyr Zelenskyy in a show of support for the country as it battles to counter Russia’s invasion and strives to join the EU as well as NATO. European Commission President Ursula von der Leyen and European Council […]
1 day ago
Tronco, or multiple foot stocks used to to constrain enslaved people, are seen at the Slavery exhib...
Associated Press

Dutch slavery exhibition to open at UN headquarters

THE HAGUE, Netherlands (AP) — A landmark exhibition on slavery in the Dutch colonial era that was first staged at Amsterdam’s Rijksmuseum is going on display at the United Nations in New York. The show, titled “Slavery. Ten True Stories of Dutch Colonial Slavery,” will open in the the U.N. headquarters’ visitors’ lobby from Feb. […]
1 day ago
A sister wears headwear showing a picture of The Last Supper, as she and a group of the Catholic fa...
Associated Press

Pope heads to South Sudan to urge peace as fighting kills 27

KINSHASA, Congo (AP) — Pope Francis opened the second and final leg of his African pilgrimage by heading to South Sudan on Friday, hoping to encourage the young country’s stalled peace process and draw international attention to continued fighting and a worsening humanitarian crisis. Francis had one final appointment Friday in Kinshasa with Congo’s bishops […]
1 day ago
This grab from video released by Adani Enterprises Ltd. on Thursday, Feb.2, 2023 shows Indian billi...
Associated Press

Indian tycoon Adani hit by more losses, calls for probe

NEW DELHI (AP) — Trading in shares in troubled Adani Enterprises gyrated Friday as the flagship company of India’s second-largest conglomerate tumbled 30% and then rebounded after more than a week of heavy losses that have cost it tens of billions of dollars in market value. The debacle, which led Adani to cancel a share […]
1 day ago

Sponsored Articles

safety from crime...

As crime increases, our safety measures must too

It's easy to be accused of fearmongering regarding crime, but Seattle residents might have good reason to be concerned for their safety.
Comcast Ready for Business Fund...
Ilona Lohrey | President and CEO, GSBA

GSBA is closing the disparity gap with Ready for Business Fund

GSBA, Comcast, and other partners are working to address disparities in access to financial resources with the Ready for Business fund.
SHIBA WA...

Medicare open enrollment is here and SHIBA can help!

The SHIBA program – part of the Office of the Insurance Commissioner – is ready to help with your Medicare open enrollment decisions.
Lake Washington Windows...

Choosing Best Windows for Your Home

Lake Washington Windows and Doors is a local window dealer offering the exclusive Leak Armor installation.
Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
Microsoft will fight US over $68.7B Activision Blizzard deal