Microsoft Responds to FTC Suit Over Activision Deal

Author: Editors Desk Source: WSJ:

December 23, 2022 at 06:35

Activision’s hit franchises include ‘Call of Duty.’ PHOTO: RICHARD B. LEVINE/ZUMA PRESS

Software giant files documents opposing claims that transaction would harm competition in videogame industry

Microsoft Corp. MSFT -2.55%decrease; red down pointing triangle has filed a rebuttal to a Federal Trade Commission lawsuit aimed at blocking the software giant’s $75 billion purchase of Activision Blizzard Inc., ATVI -0.25%decrease; red down pointing triangle saying the deal will not hurt competition in the videogaming industry.

The software giant said in its defense of the deal that it is not the videogame industry’s top console company or software developer and its acquisition is aimed at becoming more competitive through its Xbox videogaming unit.

“Xbox wants to grow its presence in mobile gaming, and three quarters of Activision’s gamers and more than a third of its revenues come from mobile offerings,” Microsoft said in its response to the FTC lawsuit. “Xbox also believes it is good business to make Activision’s limited portfolio of popular games more accessible to consumers, by putting them on more platforms and making them more affordable.”

Microsoft had signaled it would challenge the antitrust regulator’s case after arguing for months the transaction wouldn’t harm competition in the videogame industry. It offered concessions to the FTC before the lawsuit was filed in a failed attempt to head off a legal battle.

In its suit, the FTC alleged that the acquisition would be illegal because it would give Microsoft the ability to control how consumers access Activision’s games beyond the Redmond, Wash., company’s own Xbox consoles and subscription services. Microsoft could raise prices or degrade Activision’s content for people who don’t use its hardware to access the developer’s games, or even cut off access to the games, the FTC said.

Microsoft has said it wouldn’t engage in such actions and that it needs Activision’s hit franchises such as “Call of Duty” and “Candy Crush” because it trails its rivals in console sales and has a limited presence in mobile-game development. The company, which values the deal at $68.7 billion after adjusting for Activision’s net cash, has also said it expects the industry to get more competitive with the rise of cloud gaming.

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