Microsoft has recently revised its argument against the Federal Trade Commission’s (FTC) lawsuit that has blocked the company’s proposed acquisition of Activision Blizzard. In the amended document, Microsoft has removed its previous claim that the FTC is in violation of the US Constitution. This initial response, which was released last month, included a series of five bullet points that argued the structure of the FTC’s in-house court was a breach of the separation of powers and that Microsoft’s Fifth Amendment right to due process was being infringed upon due to the Commission’s alleged prejudgment of the case.
However, in the revised statement, Microsoft has decided to omit these constitutional defenses while maintaining the majority of its other arguments in favor of the Activision Blizzard merger. A spokesperson from Microsoft’s public affairs department has admitted that “we should have dropped these defenses before we filed.” It seems that Microsoft initially included every possible argument it could think of in its response, but has since chosen to take a more measured approach. The spokesperson also mentioned that the company has taken into consideration the criticism surrounding its initial arguments and “appreciated feedback about these defenses.”
The acquisition of Activision Blizzard would give Microsoft control over popular franchises such as Call of Duty, Overwatch, Diablo, and World of Warcraft and has therefore attracted the attention of regulatory bodies around the world. The FTC and various members of the gaming industry are concerned that Microsoft may use this acquisition to limit access to Call of Duty on competing consoles and force consumers to use Microsoft’s own Xbox consoles, thus stifling competition.
To address these concerns, Microsoft has emphasized that a significant portion of Call of Duty’s revenue comes from sales on other consoles and that it would not be financially viable to eliminate this revenue stream. Microsoft has offered a 10-year deal to PlayStation and Nintendo for Call of Duty to stay on their platforms. The company has also pointed to titles like The Elder Scrolls Online, which have remained accessible on multiple platforms, as evidence that exclusivity can be detrimental to multiplayer games that rely on a large player base. It remains to be seen whether Microsoft will follow through on these assurances.
The FTC has recently been active in the gaming industry, conducting investigations into the loot boxes in Star Wars Battlefront 2, blocking a proposed Nvidia merger, and issuing a record-breaking penalty to Epic Games.
