Microsoft Corp. is defending its acquisition of Activision Blizzard Inc. in a court battle with the Federal Trade Commission (FTC) over the $69 billion dollar deal. The case centers around whether the purchase would hurt competition in the global gaming market, as Microsoft could hypothetically use its newfound power to exclude Activision games from Sony PlayStation devices, which dominate the console market.
The FTC is seeking to block the transaction while its legal challenge is pending, causing both sides to present their arguments in a five-day court hearing that began in San Francisco on Thursday. The deal would make Microsoft the third-biggest player in the gaming market after Tencent Holdings Ltd. and Sony.
During the opening statements, Microsoft's attorney, Beth Wilkinson, sought to refute the FTC's allegations by reading an email from James Ryan, the head of Sony Interactive Entertainment, to a former colleague shortly after the Activision deal was announced in January 2022. The email stated that the acquisition was not an attempt to push Sony out of the gaming console market and that Activision's top-selling game, Call of Duty, would still be seen on PlayStation for many years to come.
The regulator has claimed that the transaction will harm competition in the console gaming and cloud gaming markets, allowing Microsoft to exclude Activision games from rival Sony PlayStation devices. However, Microsoft argues that the acquisition deal does not represent "an exclusivity play" intended to hurt Sony's gaming console business.
After the opening statements, the FTC questioned Matt Booty, who heads Xbox Game Studios at Microsoft, on the company's gaming business strategies. The head of publishing at the Microsoft gaming unit Bethesda, Pete Hines, was also present as a witness in Thursday's hearing.
FTC lawyer James Weingarten argued that the merger would harm competition in the console, subscription game service, and cloud gaming markets. The combined company would have the ability to harm competition through various strategies, not just by taking games from other platforms.
Overall, the court battle between Microsoft and the FTC highlights the importance of maintaining competition in the global gaming market, as the acquisition of Activision would give Microsoft a significant advantage over its rivals.