Microsoft Corp. began its court fight with the Federal Trade Commission over the $69 billion purchase of Activision Blizzard Inc. by saying that even an executive at rival Sony Corp. had acknowledged the deal wasn’t “an exclusivity play” to hurt the PlayStation gaming console.
The FTC wants to block the transaction while its legal challenge is pending, and the two sides are arguing the case at a five-day court hearing that began Thursday in San Francisco. Microsoft is defending the blockbuster deal, which would catapult it to the No. 3 position in the global games market after Tencent Holdings Ltd. and Sony.
During opening statements, Microsoft attorney Beth Wilkinson sought to counter the FTC’s claim that the deal would hurt competition by reading the contents of an email sent by James Ryan, who heads Sony Interactive Entertainment, to a former colleague shortly after the Activision transaction was announced in January 2022.
Ryan said the deal wasn’t an attempt to push PlayStation out of the console market and that after speaking with Microsoft and Activision executives, he was “pretty sure we will continue to see” Activision’s top-selling shooter game, Call of Duty, “on PlayStation for many years to come,” Wilkinson said as she read the email in court.
The regulator claims the transaction will hurt competition in the markets for console gaming and cloud gaming, which lets gamers stream games to PCs and consoles rather than downloading them. For example, Microsoft could exclude Activision games from rival Sony PlayStation devices, which dominate the console market, the regulator has said.
FTC lawyer James Weingarten told US District Court Judge Jacqueline Scott Corley that the combined company after the deal “will have the ability to harm competition” in the console, subscription game service and cloud-gaming markets. “The myriad strategies available for a combined company to affect its rivals,” are at the heart of the case and not just the Microsoft’s potential move to take games away from other platforms, Weingarten, said.
After opening statements, FTC began questioning Matt Booty, head of Xbox Game Studios at Microsoft, on the company’s game business strategies. Pete Hines, who heads publishing at Microsoft game unit Bethesda, is also Thursday’s witness list.
The case is Federal Trade Commission v. Microsoft Corp., 3:23-cv-02880, US District Court, Northern District of California (San Francisco).
--With assistance from Cecilia D'Anastasio.
