Call of Duty maker Activision Blizzard has petitioned a federal judge in San Francisco to approve Microsoft’s $69 billion acquisition. Activision’s CEO told the hearing that restricting other gaming platforms from offering Call of Duty would alienate its 100 million monthly active users and lessen its popularity, thus increasing competition between gaming platforms for Call of Duty users and alienating some 100 million monthly active users and detract from its popularity. Wednesday marks the beginning of what could become one of the largest tech mergers ever; its outcome could determine its success or otherwise and President Joe Biden pledge to strengthen antitrust enforcement and stop deals that harm consumers, workers or small businesses.
Federal antitrust enforcers are taking measures to block this deal as they believe it will give Microsoft, who makes its Xbox game console, an unfair advantage over Sony and Nintendo consoles. Although Activision licenses popular games like Call of Duty to other devices to maintain competition amongst devices, regulators argue this won’t satisfy customers and ensure true competition among companies.
Microsoft and Activision have threatened to pay a $3 billion breakup fee if their deal doesn’t close by July 18. A federal district judge will rule on this matter on Aug 2.
Bobby Kotick of Activison Blizzard was the first witness to take the stand during what’s expected to be a five-day trial. He presented Microsoft’s acquisition as an effort to help more gamers discover and play more of their favorite titles, providing financial evidence that Microsoft was not violating antitrust laws. According to Bobby, his company founded in 1986 had always believed software should be readily accessible across platforms.
Satya Nadella of Microsoft testified after Kotick. He reiterated many of Kotick’s arguments and added that Microsoft had proven itself “time after time to be the ideal place to build businesses that make an impactful difference in people’s lives.” Nadella stressed the need for all parties involved to work together towards helping gamers, noting how Microsoft plans on investing further into its Xbox One console.
The FTC is challenging Microsoft’s acquisition of Activision because it believes this could give Microsoft an incentive to restrict competition for popular Xbox system titles like Call of Duty by offering them at higher prices on its Xbox console, in violation of antitrust laws and warranting a trial review process.
Recent years have seen both the FTC and Justice Department increase their scrutiny of big tech deals, strengthening merger guidelines in an attempt to detect and prevent illegal, anticompetitive deals that harm consumers and workers. They also aim to be more assertive when prosecuting antitrust violations – with President Trump signaling his intent to take tougher actions against powerful corporate monopolies such as Google, Amazon and Facebook.