Microsoft portrays Sony as ‘chief complainant’ against $75 billion Activision deal

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Microsoft sought to portray rival Sony as the main agitator behind regulatory moves to block its $75 billion purchase of gaming company Activision Blizzard, as it faced US antitrust regulators in court on Thursday for the first time in nearly a quarter century. faced against.

A top executive of the Japanese company first dismissed the idea that the deal could lead to anti-competitive behavior, before Sony reversed course and became a “complainant-in-chief” against it, according to a Microsoft lawyer. said at a hearing in San. Francisco federal courtroom.

The hearing comes 10 days after an application to the US Federal Trade Commission sought an injunction to prevent the software company from closing its Activision purchase until a separate antitrust case brought by the agency is resolved. Hearing does not happen.

The clash is the first time Microsoft has faced an antitrust case against the US since the Justice Department accused it of using illegal methods to maintain its PC monopoly in the 1990s. A court ordered the company to be broken up in 2000, although the order was overturned on appeal and the matter was later settled.

In opening arguments, FTC attorney James Weingarten said that Microsoft would have the “ability and incentive” to harm competition after the deal by withholding some of Activision’s games from competitors or by raising prices or reducing content in a way that would make Activision less competitive. Games will become less attractive. rival platform.

He said the agency would present “a lot of evidence” during the hearing on how Microsoft reneged on a promise not to block games after a similar acquisition of gaming company ZeniMax.

Likely to be stopped by Microsoft Duty, Activision’s most popular game from Sony’s PlayStation, has become a central issue in this case. Beth Wilkinson, representing the companies, said that the financial model Microsoft presented to its board for the deal involved continuing to make games available on PlayStation and its own Xbox consoles if they could not play against it. customers will be harmed. The guys on the Sony console.

Microsoft said in a court filing last week that it had offered Sony a 10-year license for Activision games and claimed the Japanese company rejected the offer in an effort to scuttle the acquisition.

Wilkinson also read an email written by Jim Ryan, head of Sony Interactive Entertainment, which said Microsoft’s planned acquisition was “not a game of exclusivity at all”, adding: “I’m pretty sure we’ll see cod on PlayStation for many years to come.”

Sony did not immediately respond to a request for comment.

The FTC first took action to block the Activision deal late last year, and launched a case in administrative court that began on August 2. However, it moved federal court earlier this month to block the companies from closing the deal earlier, saying there would be no harm to competition while its case is being considered.

The agency claims that after the acquisition, Microsoft will have a strong financial incentive to turn Activision’s most popular games into exclusive properties available only on its platform. It claimed that this would harm competition in the separate markets for console gaming, library of games available through subscription, and cloud gaming.

The FTC’s objections are more comprehensive than those of the UK’s Competition and Markets Authority, which sought to block the deal only because of potential harm to the emerging cloud gaming market. The European Commission has approved the transaction.

An 18-month deadline for Microsoft to complete the purchase expires on July 18, increasing pressure to close the transaction before the FTC’s administrative law case begins. If the software company fails to complete the deal, it will have to pay a break-up fee of $3 billion. In their filing last week, the companies claimed that because of this, the preliminary injunction would delay the closing. , , The transaction will almost certainly be interrupted”.

Both companies have lobbied hard to allow the acquisition to be completed on its original terms, and a person familiar with the situation said they would easily cancel their deal if the FTC was successful in preventing it from closing immediately. Can agree to extend.

Microsoft chief executive Satya Nadella and Activision’s Bobby Kotick are among the witnesses appearing in person at the five-day hearing.