Microsoft and Activision Chiefs Testify Merger Will Benefit Consumers

Microsoft CEO Satya Nadella appears in federal court on Wednesday, vowing to support open platforms and consumer choice, overcoming regulators’ opposition to $70 billion Activision Blizzard He stressed the tech giant’s commitment to complete the acquisition.

Nadella countered claims by technology regulators that Microsoft’s deal with the video game giant stifled competition and restricted only Activision games, saying, “If I had to leave it to you, I’d say ‘console monopoly’. I want to get rid of all the ,” he testified. to Microsoft’s Xbox console player. “There is no love in that world.”

The fourth day of hearings in San Francisco federal district court, which could decide the outcome of the deal, was the most high-profile hearing with Nadella and Activision CEO Bobby Kotick in attendance. rice field.

A major takeover challenge by Lina Khan’s Federal Trade Commission is seen as a test of whether a more aggressive effort to rein in the tech giants will succeed. The FTC is seeking a preliminary injunction barring the two companies from consummating the transaction before they have an opportunity to contest the case in internal court.

Microsoft has said such a lengthy delay would most likely ruin the deal, a view Kotik shared in his testimony on Wednesday.

F.TC. Microsoft argues the merger would undermine competition in the video game industry and harm consumers, as it could pull Call of Duty and other Activision games from rival Sony’s PlayStation console. . Kotik said he ultimately wouldn’t be the one to make the decision if his company was acquired, but he promised he wasn’t going to.

“If you remove a game from one platform, there will be an uprising,” Kotik said. “It will hurt the company’s reputation.” Nadella similarly said he wouldn’t hold back on “Call of Duty.”

Under Mr Khan, the FTC has accused Meta, Microsoft, Amazon, and other companies of the likes of Meta, Microsoft, and Amazon, alleging that Big Tech’s sheer power over telecommunications, social media, and online commerce has created monopolies that corporations have created to the detriment of consumers. sued the company.

After Microsoft announced its intention to restructure the Xbox business by acquiring Activision early last year, it regulated that the deal would benefit gamers and not restrict access to Activision’s games. To show the authorities, the company has made deals with other video game companies such as Nintendo.

Most government agencies, including the European Commission, were convinced. But the FTC and the UK Competition and Markets Authority are trying to block the deal.

The legal argument focuses on the practice of exclusivity, releasing a highly anticipated game on only one console. Microsoft has repeatedly promised not to make Call of Duty an Xbox exclusive if it buys Activision, and has offered Sony a deal to include that guarantee in writing.

But the FTC said in court last week that Microsoft could quickly realize that in 2020, Sony could pay to make Starfield, one of ZeniMax’s key upcoming games, a PlayStation exclusive, and ZeniMax Media. It claimed to have moved to acquire the chain of game studios for $7.5 billion. His new ZeniMax titles, including Starfield, are now Xbox exclusives.

Sony CEO Jim Ryan said in a recorded deposition video that Microsoft will try to “steer PlayStation gamers to the Xbox platform” even if Call of Duty remains on the PlayStation. He testified that he thought it would. By somehow degrading the Call of Duty experience on PlayStation.

“I think they’re trying to use Call of Duty in some way to hurt us,” Ryan said.

But Nadella testified that he opposes a walled-in approach to gaming.

“I grew up in a company that always believed that software should run on as many platforms as possible,” he said. “And I believe in it.”

Microsoft has been trying to establish itself as a distant third in the three-player game console market dominated by Nintendo and Sony. Xbox chief Phil Spencer said Xbox “isn’t a strong business” as the third-largest competitor.

Spencer confirmed that Microsoft has discussed the possibility of excluding Activision games other than Call of Duty from the PlayStation.

The FTC argues that Microsoft’s acquisition of Activision would also give it an unfair advantage in game subscription services and the nascent cloud gaming market.

Judge Jacqueline Scott Corey is expected to decide whether to grant the injunction by July 18, when the transaction is expected to close. Her questions in court have at times been skeptical of some of the FTC’s claims.

The FTC, for example, tried to get Spencer to pledge to let PlayStation play Call of Duty for at least 10 years, no matter what terms Sony demanded as part of the deal. Judge Corey apparently felt such blanket promises were unrealistic, especially when Sony asked for unreasonable things like receiving Call of Duty for free.

“Well, it’s not going to be zero dollars,” Judge Corey said impatiently. “I understand.”

David McCabe Contributed to reporting from Washington.

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