Microsoft and the Federal Trade Commission were ready to face off over whether the United States would halt the computer giant’s acquisition of Activision Blizzard.
Microsoft officially challenged the FTC lawsuit’s allegation that the $68.7 billion acquisition should be canceled on Thursday.
The software powerhouse now appeared to be on a colliding approach with American regulators empowered by President Joe Biden’s determination to get tough on anti-competitive activities after years of ignoring the criticism of the government that has been targeted at big tech peers such as Amazon and Google.
The FTC alleged that by constraining rivals to Microsoft’s Xbox game system and its developing Xbox Game Pass subscription business, the deal may violate antitrust regulations.
Microsoft’s conflict with PlayStation maker Sony regarding popular Activision Blizzard titles like the military action game Call of Duty is at the core of the argument.
In its reply to the FTC, Microsoft attempted to reduce the value of Xbox, trying to refer to it as the “third-place manufacturer of gaming consoles” after Sony and Nintendo and one of many publishers of well-known video games with “next to no presence in mobile gaming,” where it is constantly striving to gain traction.
The disagreement could be a tough testing ground for Lina Khan, the FTC chairwoman nominated by Biden, who has tried to increase antitrust law enforcement. Earlier in December, the FTC voted 3-1 to file the complaint intending to prevent the deal, with Khan voting in support along with the other two Democratic Commissioners and the single Republican voting against.
Microsoft on Thursday objected to the FTC’s characterization, saying it made clear to European regulators it would “approach exclusivity for future game titles on a case-by-case basis, which is exactly what it has done.”
Top-selling games like Call of Duty were highlighted by the FTC in their complaint as essential because they build a base of players who are committed to their favored console or streaming service.
“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.”
Microsoft gave the appearance that it will aggressively defend its position in court with a team under the direction of famous corporate lawyer Beth Wilkinson, while equally allowing the possibility for a settlement.
“Even with confidence in our case, we remain committed to creative solutions with regulators that will protect competition, consumers, and workers in the tech sector,” said Microsoft’s president, Brad Smith, in a statement Thursday.
“As we’ve learned from our lawsuits in the past, the door never closes on the opportunity to find an agreement that can benefit everyone.”