The Federal Trade Commission has sued to dam Microsoft’s $69 billion deal to purchase Activision Blizzard, claiming that the mega-deal would stifle competition within the lucrative video-game industry, sources told The Post.
The aggressive clampdown under FTC Chair Lina Khan — a 33-year-old legal prodigy who has vowed to crack down on Big Tech — is coming despite a last-ditch effort on Wednesday by Microsoft president Brad Smith to curry favor with the panel’s Democratic commissioners, as first reported earlier this week by The Post.
The panel voted 3 to 1 in favor of the blockbuster lawsuit, which guarantees to develop into a centerpiece of Khan’s pledge to counter consolidation in Silicon Valley. In a Thursday statement, the FTC’s Bureau of Competition Holly Vedova claimed that Microsoft had an iffy track record on the subject of competition concerns.
“Microsoft has already shown that it could and can withhold content from its gaming rivals,” Vedova said in a press release. “Today we seek to stop Microsoft from gaining control over a number one independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.”
In a Thursday statement, Microsoft ‘s Smith signaled that the corporate plans to defend its mega-merger in court, insisting that it “will expand competition and create more opportunities for gamers and game developers.”
“We now have been committed since day one to addressing competition concerns, including by offering earlier this week proposed concessions to the FTC,” Smith said in a press release. “While we believed in giving peace a probability, we’ve got complete confidence in our case and welcome the chance to present our case in court.”
Smith had argued that Microsoft’s deal — which might pair the tech giant’s Xbox consoles with Activision’s catalogue of blockbuster titles that include “Call of Duty” and “World of Warcraft” — would still leave it the No. 3 player in video games behind Sony and Nintendo.
Smith this week publicly offered a 10-year license agreement to Sony allowing its PlayStation to sell “Call of Duty” and receive latest games concurrently Microsoft’s Xbox customers. He also announced he had reached a 10-year agreement with Nintendo to supply the games on its consoles and its current-generation hardware Switch.
Sony shot back on Thursday, blasting a proposed concession from Microsoft for a 10-year licensing deal for “Call of Duty” on Sony Playstations “misleading,” adding that it didn’t consider “Call of Duty” would run on Nintendo’s Switch console.
A key sticking point is Microsoft’s Xbox “Game Pass” subscription service, which provides customers access to many various games, Richard Hoeg, business lawyer and host of the Virtual Legality podcast, told The Post. Adding Activision’s formidable catalog to Game Pass is seen as an enormous competitive threat by Sony and Activision, in line with Hoeg.
“Game Pass is a unique business model,” Hoeg said. “Game Pass is its own market.”
Activision CEO Bobby Kotick told staffers in a memo that the FTC’s lawsuit “sounds alarming, so I would like to strengthen my confidence that this deal will close. The allegation that this deal is anti-competitive doesn’t align with the facts, and we consider we’ll win this challenge.”
“Our players want selection, and this offers them exactly that,” Kotick added. “We consider these arguments will win despite a regulatory environment focused on ideology and misconceptions concerning the tech industry.”
At an FTC meeting Thursday, Khan got the three votes needed to authorize a suit though Democratic Commissioner Rebecca Slaughter earlier seemed receptive to Microsoft’s settlement offer, sources said. Slaughter in the long run followed Khan in voting to sue, together with the opposite Democratic Commissioner Alvaro Bedoya. The one Republican Commissioner, Christine Wilson, has said she supports the merger.
Slaughter on Wednesday had asked Microsoft’s Smith questions and was engaged at their meeting, a source said. But in the long run Smith couldn’t persuade her to go against the agency’s boss.
There was also some hope that Microsoft as a giant donor to the Democratic party could use its political influence to steer at the least one in every of the three Democratic commissioners to approve the merger.
That wasn’t enough in the long run for Khan and the commissioners who’ve shown a reluctance to approve mergers with behavorial remedies, people who require responsible behavior post-merger.
Khan also has been a tricky tech enforcer and is presently in court suing Facebook owner Meta to stop its $400 million acquisition of Inside, a virtual-reality company that Mark Zuckerberg’s is seeking to boost its development of the metaverse.
Now the FTC will take the case to court within the likely event that Microsoft will appeal the ruling. Some legal experts consider Microsoft has a winnable case. Nonetheless, Microsoft now has to not only win this case, but additionally get deal approved by the European Union and British Competition and Market Authority who now usually tend to follow the FTC’s lead.
If it cannot close the deal, Microsoft would owe Activision a $3 billion termination fee.
The Federal Trade Commission has sued to dam Microsoft’s $69 billion deal to purchase Activision Blizzard, claiming that the mega-deal would stifle competition within the lucrative video-game industry, sources told The Post.
The aggressive clampdown under FTC Chair Lina Khan — a 33-year-old legal prodigy who has vowed to crack down on Big Tech — is coming despite a last-ditch effort on Wednesday by Microsoft president Brad Smith to curry favor with the panel’s Democratic commissioners, as first reported earlier this week by The Post.
The panel voted 3 to 1 in favor of the blockbuster lawsuit, which guarantees to develop into a centerpiece of Khan’s pledge to counter consolidation in Silicon Valley. In a Thursday statement, the FTC’s Bureau of Competition Holly Vedova claimed that Microsoft had an iffy track record on the subject of competition concerns.
“Microsoft has already shown that it could and can withhold content from its gaming rivals,” Vedova said in a press release. “Today we seek to stop Microsoft from gaining control over a number one independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.”
In a Thursday statement, Microsoft ‘s Smith signaled that the corporate plans to defend its mega-merger in court, insisting that it “will expand competition and create more opportunities for gamers and game developers.”
“We now have been committed since day one to addressing competition concerns, including by offering earlier this week proposed concessions to the FTC,” Smith said in a press release. “While we believed in giving peace a probability, we’ve got complete confidence in our case and welcome the chance to present our case in court.”
Smith had argued that Microsoft’s deal — which might pair the tech giant’s Xbox consoles with Activision’s catalogue of blockbuster titles that include “Call of Duty” and “World of Warcraft” — would still leave it the No. 3 player in video games behind Sony and Nintendo.
Smith this week publicly offered a 10-year license agreement to Sony allowing its PlayStation to sell “Call of Duty” and receive latest games concurrently Microsoft’s Xbox customers. He also announced he had reached a 10-year agreement with Nintendo to supply the games on its consoles and its current-generation hardware Switch.
Sony shot back on Thursday, blasting a proposed concession from Microsoft for a 10-year licensing deal for “Call of Duty” on Sony Playstations “misleading,” adding that it didn’t consider “Call of Duty” would run on Nintendo’s Switch console.
A key sticking point is Microsoft’s Xbox “Game Pass” subscription service, which provides customers access to many various games, Richard Hoeg, business lawyer and host of the Virtual Legality podcast, told The Post. Adding Activision’s formidable catalog to Game Pass is seen as an enormous competitive threat by Sony and Activision, in line with Hoeg.
“Game Pass is a unique business model,” Hoeg said. “Game Pass is its own market.”
Activision CEO Bobby Kotick told staffers in a memo that the FTC’s lawsuit “sounds alarming, so I would like to strengthen my confidence that this deal will close. The allegation that this deal is anti-competitive doesn’t align with the facts, and we consider we’ll win this challenge.”
“Our players want selection, and this offers them exactly that,” Kotick added. “We consider these arguments will win despite a regulatory environment focused on ideology and misconceptions concerning the tech industry.”
At an FTC meeting Thursday, Khan got the three votes needed to authorize a suit though Democratic Commissioner Rebecca Slaughter earlier seemed receptive to Microsoft’s settlement offer, sources said. Slaughter in the long run followed Khan in voting to sue, together with the opposite Democratic Commissioner Alvaro Bedoya. The one Republican Commissioner, Christine Wilson, has said she supports the merger.
Slaughter on Wednesday had asked Microsoft’s Smith questions and was engaged at their meeting, a source said. But in the long run Smith couldn’t persuade her to go against the agency’s boss.
There was also some hope that Microsoft as a giant donor to the Democratic party could use its political influence to steer at the least one in every of the three Democratic commissioners to approve the merger.
That wasn’t enough in the long run for Khan and the commissioners who’ve shown a reluctance to approve mergers with behavorial remedies, people who require responsible behavior post-merger.
Khan also has been a tricky tech enforcer and is presently in court suing Facebook owner Meta to stop its $400 million acquisition of Inside, a virtual-reality company that Mark Zuckerberg’s is seeking to boost its development of the metaverse.
Now the FTC will take the case to court within the likely event that Microsoft will appeal the ruling. Some legal experts consider Microsoft has a winnable case. Nonetheless, Microsoft now has to not only win this case, but additionally get deal approved by the European Union and British Competition and Market Authority who now usually tend to follow the FTC’s lead.
If it cannot close the deal, Microsoft would owe Activision a $3 billion termination fee.
