The first pre-trial hearing in the Biden administration's lawsuit against Microsoft over its $69 billion attempt to acquire "Call of Duty" creator Activision Blizzard has been scheduled for Tuesday by a judge, reported Reuters.
The merger would give Microsoft's Xbox exclusive access to Activision games, leaving Nintendo gaming systems and Sony's PlayStation out in the cold, according to the Federal Trade Commission (FTC), which oversees antitrust laws. The FTC requested a judge to halt the transaction earlier this month.
Microsoft has responded that both players and gaming firms would gain from the agreement, and has offered to enter into a legally enforceable consent decree with the FTC in order to provide "Call of Duty" games to rivals like Sony for a decade.
Microsoft made the argument in a filing aimed at convincing a judge at the FTC to allow the deal to proceed.
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The case is evidence that US President Joe Biden's administration is taking a tough stance on antitrust enforcement. However, antitrust experts claim that given the voluntary concessions made by Microsoft to alleviate concerns that it would monopolise the gaming business, the FTC will have a difficult time persuading a judge to reject the agreement.
The agreement is also being closely scrutinised in the United Kingdom and the European Union, where examinations won't be finished until the following year.
The FTC's complaint cites Microsoft's acquisition of renowned game developer Bethesda Softworks and its parent firm ZeniMax in 2021 as an instance of the business restricting some upcoming game releases to the Xbox One even after promising European regulators it had no such plans.
The FTC's suit describes top-selling franchises like Call of Duty as important because they develop a base of loyal users attached to their preferred console or streaming service.
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“With control of Activision’s content, Microsoft would have the ability and increased incentive to withhold or degrade Activision’s content in ways that substantially lessen competition — including competition on product quality, price, and innovation," the FTC lawsuit says. "This loss of competition would likely result in significant harm to consumers in multiple markets at a pivotal time for the industry.”
More than 20 years ago, after Microsoft engaged in anticompetitive behaviour relating to its dominating Windows software, a federal judge ordered its dissolution, sparking Microsoft's most significant antitrust dispute to date. On appeal, the decision was overturned, but the court also fined the corporation.
Instead of requesting an immediate federal court injunction to stop the merger, the FTC chose to send the complaint to its internal Administrative Law Judge D. Michael Chappell, which may cause the case to be delayed at least until August, when the first evidence hearing is set. In accordance with their contract, Microsoft must pay Activision Blizzard a breakup fee of up to $3 billion if the transaction cannot be completed by July 18.
The timing and trajectory of the case could change depending on how regulators in the UK and Europe rule on the merger next year. If Microsoft wins approval in Europe, it could use that to try to expedite the process in US courts.
The merger faced yet another challenge this week from a group of individual video game players who sued in a San Francisco federal court to stop the deal on antitrust grounds, as per a report by the Associated Press.
The plaintiffs, all fans of Activision Blizzard’s Call of Duty franchise and other popular titles such as World of Warcraft, Overwatch and Diablo, are particularly concerned about how the consolidation would affect future game quality, innovation and output, said their attorney Joseph Alioto.
(With agency inputs)
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