Microsoft Gets Pre-Trial Hearing for Activision Blizzard Acquisition

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Microsoft will have its first day in federal court to fight against the Federal Trade Commission’s opposition to its proposed $69B USD acquisition of Call of Duty and World of Warcraft maker Activision Blizzard.  A federal judge has given Microsoft and the FTC a Jan. 3, court date to hear pre-trial motions and arguments to decide if the case will go forward, according to a Reuters report.

The FTC officially opposed the transaction on Dec. 8, claiming in a lawsuit filed in federal court that the acquisition would create a monopoly and stifle competition. The agency claimed (in part) in its filing that the Xbox and GamePass gaming service owner “would gain control of top video game franchises, enabling it to harm competition in high-performance gaming consoles and subscription services by denying or degrading rivals’ access to its popular content.”

That lawsuit was filed after FTC commissioners voted in early December to issue the complaint (a 3-1 vote, with Republican Commissioner Christine S. Wilson voting dissenting).

In a 37-page response to the court filed just before the Christmas holiday, Microsoft said that the FTC’s opposition violates its constitutional rights to due process under Fifth Amendment and that Sony (which seems to be the principal global adversary of this acquisition) is seeking to insulate itself from competition: “Sony may prefer to protect the revenues it gets from more expensive individual game sales, but the antitrust laws do not serve to insulate the dominant market player and its favored business model from competition,” Microsoft wrote in its response.

Experts in mergers and acquisitions believe that the FTC faces an uphill battle in court fighting this deal (described by some antitrust experts as a “vertical merger”) because Microsoft has already taken steps to offer remedies in the form of 10-year deals to keep Call of Duty on competitive platforms including Nintendo’s current and future consoles and Valve’s PC gaming store, Steam. Microsoft also offered a similar deal to Sony for PlayStation platforms, but the company appears to have rejected that offer, instead letting regulators in the U.S., UK, and European Union take point in the fight.