The CEOs of Microsoft and Activision are fighting for their $75bn deal in a court hearing

A Microsoft logo is seen on an office building in New York City

Receive free updates on Microsoft Corp

The chief executives behind Microsoft’s planned $75bn takeover of Activision made a last-ditch attempt to save the deal in a courtroom on Wednesday in the face of US government objections that could result in its annulment as early as next week.

The takeover of the gaming company will almost certainly fall apart if a judge sides with the Federal Trade Commission, according to executives and lawyers for the companies at a hearing in federal court in San Francisco, which began Thursday. The agency is seeking a preliminary injunction to stop the deal from closing while it pursues a parallel case in an administrative court.

However, the evidence and questioning during the hearing raised the hopes of the deal’s supporters on Wall Street. Judge Jacqueline Scott Corley repeatedly prodded an expert witness called by the FTC in her review of the deal and at one point cut off the agency’s attorney during questioning. He also invited a Microsoft executive to swear under oath that the company would grant Sony’s PlayStation a 10-year license for Activision’s most popular game, Call of Duty — a central issue in the case.

If the FTC loses its bid for a preliminary injunction, the agency’s separate case in administrative court will be in doubt. Earlier this year, the agency abandoned further action against Meta after failing to obtain a preliminary injunction blocking that company’s purchase of virtual reality game company Within.

See also  After Reports of Canned AR Glasses, Google's XR Ambition May Just Be a Daydream Without Samsung

A similar outcome in the Activision case would leave the UK’s Competition and Markets Authority as the only regulator blocking the deal. Closing arguments in the US hearing are set for Thursday, and a decision could come as early as Monday.

Microsoft chief executive Satya Nadella used his 40-minute appearance in federal court to underscore his company’s claim that bigger gaming rival Sony was seeking to block the deal for competitive reasons, instead that is because it is genuinely concerned about losing access to Activision titles.

Nadella said he guarantees “100 percent” that Microsoft will do it Call of Duty available on PlayStation, and that it “makes no economic sense and no strategic sense” to limit the game to his company’s Xbox console.

In a reference to Sony’s PlayStation, he said: “The dominant player defines market competition with exclusives, so that’s the world we live in. I have no love for that world.”

In earlier testimony, the FTC pointed to the way Microsoft made some of the games from another acquisition exclusive to its Xbox console, despite initially saying it would keep them available. That said, Microsoft has an incentive to do the same with Activision games.

In the most dramatic evidence presented during the hearing, a lawyer for Microsoft pointed to an email from Sony’s PlayStation chief Jim Ryan assuring a colleague that the Activision purchase was unlikely to lead to games its to be exclusive to Xbox. In the final video testimony shown during the hearing, Ryan said he changed his view after seeing the details of the terms Microsoft was proposing, while also growing concern that PlayStation customers could be left with “degraded” versions of games.

See also  Here's The Email That Set Sony's 'Alarm Bells Ringing' On The Xbox ActiBlizz Deal

Much of the hearing raised technical questions about the video games market, where the FTC says Microsoft will have too much power for high-performance game consoles occupied by the Xbox and PlayStation, as well as well as separate markets for multi-game subscription and cloud streaming services.

Microsoft, by contrast, has sought to paint itself as the third largest player in a larger console market that also includes Nintendo’s Switch. Also, instead of separate markets, it says its Game Pass subscription service is just an alternative way to pay for games, while cloud streaming is just a console gaming feature.

Hamon Nadella, an attorney for the FTC pointed to comments he made during an earnings call about the success of the latest Xbox console. The agency also cited his predictions about the future importance of cloud-based gaming. However, Nadella said there is little need to stream video games and his definition of cloud services includes Xbox Live, which makes it possible to play with other people through the console.

In evidence filed as part of the case, a Microsoft executive singled out game streaming as a market the company is determined to dominate.

“It’s practically impossible for anyone to start a new video streaming service at scale at this point,” Matt Booty, head of Xbox Games Studios, wrote to a colleague in 2019, more than two years before the Activision deal was announced. . Making the case for the software company to spend heavily to cement its leadership in streaming, he added: “We’re in a very unique position to be able to spend Sony out of business.”

See also  Asus ZenFone 10 vs OnePlus 11: Asus or OnePlus?

Despite this, backers of the deal have shown mixed support for subscription-based streaming of games. Bobby Kotick, chief executive of Activision, told the court that such services, which give players access to a library of games for a flat price, “undermine the economics” of games.

Pointing to the losses stemming from Hollywood’s streaming video wars, he added: “I have a general aversion to the idea.”

#CEOs #Microsoft #Activision #fighting #75bn #deal #court #hearing

About the author


As a seasoned content writer for our company blog, Ann brings a unique blend of creativity, research prowess, and an unwavering commitment to delivering engaging and informative content. With a keen eye for detail and a deep understanding of our target audience, she effortlessly crafts articles that educate, inspire, and captivate our readers.

Add Comment

Click here to post a comment