Federal courts have begun their five-day long hearing over Microsoft’s plans to purchase Activision Blizzard for $69 billion, which has already been hit with controversies from both competitors and government institutions. Microsoft has come straight out the gate with a bold statement where it declared that it could abandon the deal if a federal judge grants an injunction that delays the deal closing.

Microsoft currently plans to close the deal on July 18, but if Microsoft loses the hearing the company would be forced into a “three-year administrative nightmare” says its lead attorney, Beth Wilkinson, stating that the outcome of the hearing would effectively “decide whether the deal goes forward.”

The core argument from the Federal Trade Commission (FTC) is that due to Activision Blizzard’s ownership of popular game franchises that are released across multiple platforms, such as Call of Duty, the acquisition would be damaging to the industry. It is asking Judge Jacqueline Scott Corley for a preliminary injunction, which would stop the deal from completing until the FTC has discussed the case in its internal court.

James Weingarten, the FTC’s lead attorney, said “If this deal is completed, the combined company will have and is likely to have the ability and incentive to harm competition in various markets related to consoles, subscription services, and cloud.” It claims Microsoft could make Activision Blizzard’s games exclusive to Xbox or degrade the quality of the games on other platforms, something Microsoft has previously denied.

Microsoft responded to these claims by saying that the deal would be good for consumers, giving consumers the ability to access more titles through services such as Xbox Game Pass, or with Nintendo and Nvidia, which it has partnered with already. It has also stated during the hearing that it would not make sense for Microsoft to remove Call of Duty from other platforms, as it would lose out on the revenue from the game.

Presently, a large proportion of countries as well as the EU have approved the acquisition, with only the UK’s Competition and Markets Authority blocking the deal, which Microsoft is currently appealing.

Source: New York Times


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