Feds may challenge Microsoft's $69 billion takeover of Activision

Feds may challenge Microsoft’s $69 billion takeover of Activision

The investigation is still ongoing, but much of the bulk of the work has been completed, including depositions from Microsoft chief executive Satya Nadella and Activision chief Bobby Kotick, people familiar with the incident said. ‘investigation. If the agency goes ahead with a case, it could step in as soon as next month, said the people, who were all granted anonymity to discuss a confidential matter.

At the heart of the FTC’s concerns is whether the acquisition of Activision would give Microsoft an unfair boost in the video game market. Microsoft’s Xbox is number three behind industry-leading Sony Interactive Entertainment and its PlayStation console. Sony, however, became the deal’s main opponent, telling the FTC and regulators in other countries that if Microsoft made hit games like Call of Duty exclusive to its platforms, Sony would be at a significant disadvantage.

The FTC declined to comment.

In an October statement to the UK Competition and Markets Authority outlining Sony’s position, and published on Wednesday, Sony says the deal will not only hurt its ability to compete, but also leave consumers with fewer choices. for games and developers with fewer choices about where to publish. Games. Microsoft is a “Tech Titan buying irreplaceable content at rock bottom prices ($68.7 billion) to topple the competition,” Sony said.

In its own statement, also released by the UK regulator on Wednesday, Microsoft accuses Sony of making self-serving claims to maintain its number one position in gaming. “The suggestion that incumbent market leader Sony, with clear and enduring market power, could be squeezed out by the smallest of the console’s three competitors, Xbox, following the loss of access to a title, is not believable.”

Microsoft said it has repeatedly promised to keep Call of Duty available on Sony’s PlayStation, and furthermore, the game isn’t the must-have that Sony says it is. Additionally, Microsoft notes that the game isn’t currently available on any subscription service, and adding it to the Xbox service in the future wouldn’t hurt Sony.

To a lesser extent, Google is also an opponent of the deal, according to two of the people with knowledge of the matter. The company argued that Microsoft deliberately downgraded the quality of its Game Pass subscription service when used with Google’s Chrome operating system, and owning Activision would bolster its incentive to do so, ultimately driving sales of hardware towards Microsoft and away from Google, the people said. .

Google is a minor player in the gaming industry and is ending its own Stadia online gaming service. However, he’s facing antitrust scrutiny around the world, including for his conduct in the gaming market, and he’s unlikely to be a friendly opponent. Fortnite maker Epic Games is currently suing Google, arguing that it is illegally blocking Fortnite from its Google Play mobile app store. As part of the case, Epic recently accused Google of paying Activision $360 million for not offering a competing app store on Android phones.

A Google spokesperson declined to comment.

Microsoft is committed to continuing to make Call of Duty available on Sony’s Playstation console and recently made an offer to give Sony access to the game for the next 10 years. The offer was first reported by The New York Times. It’s unclear how Sony responded to the offer, and it didn’t respond to comments on Wednesday.

The FTC’s concerns go beyond Call of Duty, however, and investigators are trying to determine how Microsoft could leverage future unannounced titles to boost its gaming business, according to two people with knowledge of the review.

“Any suggestion that the transaction could lead to anti-competitive effects is complete nonsense. This merger will benefit gamers and the American gaming industry, especially as we face increasingly fierce competition from overseas,” said Activision spokesman Joe Christinat. “We are committed to continuing to work cooperatively with regulators around the world to allow the transaction to proceed, but we will not hesitate to fight to defend the transaction if necessary.”

Activision also disputes Epic’s claims. “Epic’s allegations are absurd,” Christinat said. “We can confirm that Google has never asked, pressured or made us agree not to compete with Google Play – and we have already submitted documents and testimonials to prove this.”

Microsoft spokesman David Cuddy said the company “stands ready to address concerns from regulators, including the FTC, and Sony to ensure the deal closes with confidence. We will continue to monitor Sony and Tencent in the market after the deal closes, and together Activision and Xbox will benefit gamers and developers and make the industry more competitive.

Technically, the FTC doesn’t have to take any action at this point. Regulators in Europe and the UK also recently opened in-depth investigations, meaning the companies could not close the deal until spring at the earliest. This means that if the FTC prosecutes, it will likely take a case to its own internal administrative tribunal.

The agency typically challenges deals first in federal court only to block them with a temporary injunction pending trial in its domestic court. Without the imminent risk of closure of the agreement, however, it would be difficult to obtain a temporary injunction.

The companies have until July next year to complete the deal without renegotiating the deal. An administrative lawsuit filed later this year or in January would likely not be resolved by July and could potentially force the companies to drop the deal.

#Feds #challenge #Microsofts #billion #takeover #Activision

Leave a Comment

Your email address will not be published. Required fields are marked *