Fight for the Microsoft-Xbox: According to three people familiar with the situation, the Federal Trade Commission is planning to bring an antitrust action to prevent Microsoft’s $69 billion merger with video game company Activision Blizzard, which is responsible for such popular titles as Call of Duty and Candy Crush.
When it comes to limiting the influence of the greatest tech corporations in the world, a lawsuit would be the FTC’s boldest action yet under Chair Lina Khan. Having gone through its own tough regulatory antitrust fights throughout the world more than two decades ago, Microsoft has positioned itself as a white knight on antitrust concerns in the IT sector.
It is not certain that a lawsuit will be filed contesting the acquisition, and two of the persons claimed that the FTC’s four commissioners have not yet voted out a complaint or met with counsel representing the corporations. Those familiar with the matter, however, said that FTC personnel investigating the agreement are doubtful of the corporations’ reasons.
People familiar with the inquiry have claimed that while it is still ongoing, much of the groundwork has been laid, including depositions of Microsoft CEO Satya Nadella and Activision CEO Bobby Kotick. The sources, who spoke on the condition of anonymity because they were discussing a sensitive topic, said the agency may go forward with a case as soon as next month.
The FTC’s main worry is that Microsoft would gain an unfair advantage in the video game business if it acquires Activision. When compared to Sony Interactive Entertainment’s dominant PlayStation console, Microsoft’s Xbox comes in at number three.
However, Sony has emerged as the principal opponent to the agreement, claiming to the FTC and authorities in other countries that Sony would be greatly disadvantaged if Microsoft made successful games like Call of Duty exclusive to its platforms.
The Federal Trade Commission said they couldn’t say anything.
Sony claims the transaction would hurt its ability to compete, leaving customers with fewer gaming options and developers with fewer places to publish games, in a statement submitted to the UK’s Competition and Markets Authority in October and released Wednesday. Sony says “Tech Titan buying up irreplaceable content at incontestable prices ($68.7 billion) to tip competition to itself,” Microsoft is a fake.
Microsoft has accused Sony of making self-serving remarks in order to protect its number one position in gaming, according to a statement made by the UK regulator on Wednesday. “The suggestion that the incumbent market leader, Sony, with clear and enduring market power, could be foreclosed by the smallest of the three console competitors, Xbox, as a result of losing access to one title, is not credible.”
Despite Sony’s claims that it is a must-have, Microsoft maintains that it will continue to make Call of Duty accessible on the PlayStation. Additionally, Microsoft maintains that the game is not presently accessible on any subscription service, and adding it to the Xbox service in the future would not affect Sony.
To a lesser level, Google is also an opponent of the merger, according to two of the people with knowledge of the subject. The company has argued that Microsoft has purposely degraded the quality of its Game Pass subscription service when used with Google’s Chrome operating system, and owning Activision would further its incentive to do so, ultimately steering hardware sales towards Microsoft and away from Google, the people said.
Google is a modest participant in the gaming sector and is closing down its own online gaming service Stadia. However, it is the subject of antitrust investigations in several jurisdictions, notably for its actions in the casino industry, so it is not likely to be a benevolent adversary.
Epic Games, the developers of Fortnite, are present in court, claiming that Google is violating the law by excluding Fortnite from the Google Play store for mobile devices. Within the context of that dispute, Epic recently accused Google of paying Activision $360 million to not provide a competitive app store for Android phones.
A Google spokesman declined to comment.
Microsoft has committed to continue making Call of Duty available on Sony’s Playstation device, and recently made an offer to grant Sony access to the game for the next 10 years. The offer was initially reported by the New York Times. It’s not clear how Sony replied to the offer and it did not answer for comment on Wednesday.
However, the FTC’s worries go beyond Call of Duty, and according to two individuals familiar with the study, it is attempting to figure out how Microsoft may use future, unannounced products to bolster its gaming business.
“Any suggestion that the transaction could lead to anti-camp effects is completely absurd. This merger will benefit gamers and the US gaming industry, especially as we face increasingly stiff competition from abroad,” stated Activision representative Joe Christinat.“We are committed to continuing to work cooperatively with regulators around the globe to allow the transaction to proceed, but will not hesitate to fight to defend the transaction if required.”
Activision denies Epic’s accusations as well.”Epic’s allegations are nonsense,” Christinat said. ”We can confirm that Google never asked us, pressured us, or made us agree not to compete with Google Play — and we’ve already submitted documents and testimony that prove this.”
David Cuddy, a Microsoft representative, stated that he “is prepared to address the concerns of regulators, including the FTC, and Sony to ensure the deal closes with confidence. We’ll still trail 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.”
The Federal Trade Commission (FTC) is not obligated to take any action at this time. European and British regulators have also launched in-depth investigations, delaying the deal’s closure until at least the spring. As a result, the FTC would likely file suit in its own internal administrative court if it did decide to do so.
In most cases, the agency will challenge a sale in federal court first, seeking a temporary order to halt the transaction until a trial in the agency’s internal court. However, a temporary injunction would be difficult to get if there was no imminent danger of the merger happening.
Companies have until July 2019 to finalize the transaction without renegotiating terms. With no guarantee of a resolution before July, the businesses may be forced to scrap the transaction if an administrative complaint is brought later this year or in January.