A court battle between Microsoft and the Federal Trade Commission has started, marking a pivotal moment that could determine the fate of one of the largest acquisitions in tech history.Â
US District Judge Jacqueline Scott Corley has initiated the proceedings for the FTC’s lawsuit, which seeks to block Microsoft’s proposed $75 billion acquisition of Activision Blizzard.
This hearing is a significant test of the Biden administration’s more aggressive stance on antitrust enforcement.
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Judge Corley, a Biden appointee based in San Francisco, will be crucial in deciding the outcome.
The FTC is seeking an injunction to prevent the completion of the deal between Microsoft and video game developer Activision.
With a deadline to close the transaction next month, both companies have expressed their intention to finalize the merger while seeking regulatory approval.
If the FTC wins its case and secures an injunction, it would temporarily halt the merger and potentially derail the deal.
Conversely, if the court denies the FTC’s request, the agency may abandon its challenge rather than proceed.
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The hearing commenced with FTC lawyer James Weingarten arguing the acquisition could grant Microsoft the power to stifle competition in the video game industry, including the rapidly growing cloud gaming market.
He claimed Microsoft could achieve this by delaying the release of Activision games or charging higher prices for them on competing platforms.
Microsoft lawyer Beth Wilkinson countered the deal would enhance competition, particularly by making Activision’s popular Call of Duty games available on inaccessible platforms.
She said the court’s decision would ultimately determine the fate of the acquisition since the FTC’s internal court process, scheduled to begin in August, could extend for several years.
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She argued Microsoft won’t receive a fair hearing in the FTC’s administrative court, alleging the commission has never ruled against itself, effectively acting as the prosecutor, jury, and appeals court.
While the transaction has received approval from regulators in the European Union, China, and other markets, the US’s Competition and Markets Authority blocked the deal in April following an extensive investigation.
Judge Corley has set aside five days for the hearing, from June 22 to June 23 and June 27 to June 29.
Key figures, including the CEOs of Microsoft and Activision, executives from Nintendo, Nvidia, and Google’s Alphabet, and expert witnesses, are expected to testify during this period.
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Sony Group’s videogaming business chief, Jim Ryan, will provide a video deposition.
Microsoft initially announced its plans to acquire Activision in January 2022, valuing the deal at $69 billion after adjusting for the net cash of the video game publisher.
In December of the same year, the FTC filed a lawsuit to block the acquisition, contending it would grant Microsoft the power to control how consumers access Activision’s games.
To address regulatory concerns, Microsoft has committed to ensuring equal access to Activision games for rival console makers and cloud-gaming companies over ten years.
