The fate of the 69 billion deal between Microsoft and

The fate of the $69 billion deal between Microsoft and Activision was in the hands of an American judge

The fate of what may be the most expensive merger in tech history now rests in the hands of a federal judge who must decide whether Microsoft can complete its purchase of video game developer Activision Blizzard. The US Federal Trade Commission has filed a lawsuit to thwart a $69 billion takeover it says will hurt competition in the games industry between Microsoft and its “worst friends” like Sony and Nintendo.

Microsoft almost got the upper hand in the trial, which ended Thursday, prompting its CEO Satya Nadella and other executives, including longtime Activision Blizzard CEO Bobby Kotick, to testify in support of the merger.

    Image source: Getty Images

Image source: Getty Images

The Federal Trade Commission (FTC), which is responsible for enforcing antitrust laws, has asked US District Judge Jacqueline Scott Corley to issue an injunction temporarily blocking the completion of the deal between Microsoft and Activision before an FTC judge can then review him process in August.

Both Microsoft and Activision have indicated that such a delay would effectively force them to back out of a deal signed 17 months ago. Microsoft will have to pay Activision $3 billion in compensation if the deal doesn’t close by July 18. “The actions of the FTC are not only unprecedented, but also damaging to the deal.”Microsoft’s chief legal officer, Beth Wilkinson, said in a final letter of defense filed Thursday.

This case is an important test for the FTC as it increasingly focuses on the technology industry. FTC Chair Lina Khan is known for her tough stance on the monopolies of tech giants like Amazon, Alphabet and Meta.*. The FTC’s loss could repeat the previous legal setback when the FTC tried to stop the meta-acquisition* Virtual Reality Fitness Company.

Judge Corley was rather skeptical about the FTC’s arguments against the Activision deal and in his closing argument specifically asked the agency’s Chief Legal Officer to explain this in more detail “What exactly is the damage” for consumers. “Why don’t you walk a little more precise? She asked. — We don’t care about Sony. We need to understand whether this will harm the consumer.”

Sony, the games industry’s fiercest opponent of the deal, told regulators it fears Microsoft will strip popular Activision franchises like Call of Duty from the dominant PlayStation video game console or offer a degraded version of those games to force gamers into it Leave the PlayStation ecosystem and move to the Microsoft Xbox. . Microsoft tried to address these concerns by arguing that it was better for Microsoft’s business to keep games like Call of Duty on multiple platforms and that removing those games from the PlayStation would cause backlash from gamers.

    Image source: Activision

Image source: Activision

“The possibility of making Call of Duty exclusive to Xbox was never reviewed or discussed with me, nor was it even mentioned in any of the presentations or discussions with the board.”Microsoft CFO Amy Hood said in an affidavit.

The FTC sought to refute Microsoft’s claims that it had no plans to develop exclusive games. The argument was made in the context of Microsoft’s earlier, high-profile $7.5 billion acquisition of top games maker ZeniMax. The FTC claims that Microsoft’s long-term plan is to differentiate its platform through the development of its games “first, better, best”. Xbox CFO Tim Stuart confirmed internal discussions at Microsoft about whether revenue from sales of more Xbox consoles and a monthly subscription to Microsoft Game Pass can offset the drop in revenue due to the development of exclusive games for Xbox.

Since then, Microsoft has made some ZeniMax games exclusive to Xbox, such as the forthcoming release of Starfield. In response to similar concerns about the Activision acquisition, Microsoft offered to enter into binding deals to keep Call of Duty on other platforms for at least a decade. Nintendo accepted this offer for its Switch console, Sony declined.

Both Microsoft and the FTC delivered closing arguments on Thursday, June 29th. Judge Corley did not give a date for the decision but said she recognized the importance and timeliness of the case. Currently, the Microsoft Activision deal is facing opposition from another major regulator, the UK’s Competition and Markets Authority, while many other countries and the European Union have approved it.

* It is included in the list of public associations and religious organizations for which the court made a final decision to dissolve or prohibit activities on the grounds provided for in Federal Law No. 114-FZ of July 25. 2002 “On Countering Extremist Activities”.

About the author

Alan Foster

Alan Foster covers computers and games and all the news in the gaming industry.

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