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In a last-ditch effort to save the $75bn acquisition of Activision, the CEOs of Microsoft appeared in court to counter objections from the US government. The Federal Trade Commission (FTC) is seeking a preliminary injunction to halt the deal, but evidence presented during the hearing has raised optimism among deal supporters. The judge has challenged the FTC’s expert witness and invited a Microsoft executive to testify under oath about granting Sony’s PlayStation a 10-year license for Activision’s popular game, Call of Duty. A decision on the injunction could come as early as Monday.
If the FTC fails to obtain a preliminary injunction, their separate case in administrative court would be uncertain. The UK’s Competition and Markets Authority would then be the only regulator standing in the way of the deal. Microsoft CEO Satya Nadella defended the acquisition in court, stating that Sony’s objections were driven by competition rather than genuine concern about losing access to Activision’s titles.
During the proceedings, the FTC highlighted Microsoft’s history of making acquired games exclusive to its Xbox console, despite earlier promises to keep them widely available. Meanwhile, a lawyer for Microsoft presented an email from Sony’s PlayStation chief, indicating that the acquisition would not lead to exclusivity. However, Sony later changed its position based on Microsoft’s proposed terms and concerns about the quality of games on PlayStation.
The FTC argues that Microsoft would have excessive power in the high-performance game console, multi-game subscription services, and cloud streaming markets. Microsoft, on the other hand, considers itself the third-biggest player in the broader console market and views its Game Pass subscription service as an alternative payment method for games.
The FTC also questioned Nadella about his previous comments on the success of Xbox and cloud-based gaming. Nadella clarified that there was little demand for streaming video games and that Xbox Live, facilitating console multiplayer, fell within their definition of cloud services. In court filings, a Microsoft executive emphasized the company’s dominance in the game streaming market, suggesting it would be difficult for new entrants to compete.
While some supporters of the deal have reservations about subscription-based game streaming services, Activision’s CEO Bobby Kotick expressed concerns about the service’s impact on game economics. He compared it to the losses witnessed in the streaming wars of the film industry and stated his aversion to the idea.
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