Microsoft and Activision Chiefs Testify Merger Will Benefit Consumers

Microsoft CEO, Satya Nadella, affirmed his commitment to open platforms and consumer choice in federal court on Wednesday. This move highlights Microsoft's determination to finalize its $70 billion purchase of Activision Blizzard, despite regulatory opposition.

"Mr. Nadella expressed his disinterest in console exclusives, countering allegations from tech regulators that Microsoft's acquisition of the video game titan would limit competition and confine Activision's games to Microsoft's Xbox users. He stated, 'I have no affinity for that realm.'"

The fourth day of a U.S. District Court hearing in San Francisco, which could decide the fate of the deal, was the most notable. It featured appearances from Mr. Nadella and Activision's CEO, Bobby Kotick.

The FTC's contestation of the major takeover, spearheaded by Chairperson Lina Khan, is seen as a litmus test for the success of intensified attempts to restrain tech behemoths. The FTC aims to secure a preliminary injunction to prevent the firms from finalizing the transaction before the agency can present its case in its internal court.

Microsoft expressed that a prolonged delay could potentially jeopardize the deal, a viewpoint that Mr. Kotick echoed in his Wednesday testimony.

The FTC contends that the proposed merger could negatively impact the video game market and consumers. This is due to the potential for Microsoft to withdraw popular Activision games, such as Call of Duty, from Sony's PlayStation. Despite Mr. Kotick's assurance of no such intention, the final decision lies with the acquiring company.

"Removing the game from a single platform could incite a revolt," stated Mr. Kotick, warning of potential harm to the company's reputation. Similarly, Mr. Nadella asserted his unwillingness to withhold Call of Duty.

Under Khan's leadership, the FTC has filed lawsuits against Meta, Microsoft, and Amazon. The agency contends that these tech giants' significant control over communication, social media, and e-commerce enables them to establish monopolies, thereby negatively impacting consumers.

Following Microsoft's declaration last year about its plans to revamp its Xbox division through the acquisition of Activision, it forged partnerships with other gaming giants such as Nintendo. This move was aimed at demonstrating to regulators that the deal would enhance the gaming experience and not limit access to Activision's games.

Numerous government bodies, such as the European Commission, have given their approval. However, the Federal Trade Commission and Britain's Competition and Markets Authority are attempting to obstruct the agreement.

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The court discussions center around the exclusivity practice, where a much-anticipated game is released solely on one console. Microsoft has consistently assured that it won't restrict Call of Duty to Xbox alone if it takes over Activision. They've even proposed a written agreement to Sony to solidify this promise.

The FTC claimed in a recent court hearing that Microsoft quickly purchased ZeniMax Media and its gaming studios for $7.5 billion in 2020. This move was reportedly in response to potential plans by Sony to make Starfield, one of ZeniMax's key upcoming games, exclusive to PlayStation. Now, new ZeniMax releases, including Starfield, are exclusive to Xbox.

Sony CEO, Jim Ryan, in a video statement, expressed his concern that Microsoft might attempt to lure PlayStation users to Xbox by diminishing the Call of Duty experience on PlayStation, despite the game's continued presence on the platform.

"Mr. Ryan expressed his concern that Call of Duty could potentially be used against us."

Mr. Nadella stated his opposition to a restrictive gaming approach.

"Raised in a firm that championed software compatibility across multiple platforms, I firmly uphold this belief," he stated.

Microsoft, represented as a minor player in the console market dominated by Nintendo and Sony, acknowledges its position. Phil Spencer, Xbox's chief, admits that their business isn't as robust due to their third-place standing.

Mr. Spencer confirmed that Microsoft has considered limiting Activision games, excluding Call of Duty, from PlayStation.

The FTC contends that Microsoft's purchase of Activision may unfairly bolster its position in the gaming subscription and emerging cloud gaming markets.

Judge Jacqueline Scott Corley is anticipated to rule on the injunction before July 18, the proposed closure date for the deal. Her courtroom inquiries have occasionally expressed doubt towards some of the F.T.C.'s claims.

The FTC attempted to secure a commitment from Mr. Spencer to maintain Call of Duty on PlayStation for a minimum of 10 years, regardless of Sony's conditions. However, Judge Corley deemed this as impractical, particularly if Sony demanded unreasonable terms such as receiving Call of Duty at no cost.

"Clearly, it won't be free of charge," stated an exasperated Judge Corley. "That was a given."