Microsoft and the U.S. Federal Trade Commission (FTC) will face each other in court on Tuesday in a first pre-trial hearing regarding the software giant’s proposed $69 billion Activision Blizzard acquisition.
Microsoft announced the acquisition in January 2022 and stated at the time that it expected to conclude the deal by the end of its next fiscal year, which closes on June 30, 2023. But the FTC, tasked by the Biden administration with reigning in the power of Big Tech, sued to block it in early December.
“Microsoft has already shown that it can and will withhold content from its gaming rivals,” FTC director Holly Vedova said at the time. “Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.”
Antitrust experts say the FTC case is fragile and expect Microsoft to prevail in court, especially given that the firm has already spelled out sweeping concessions that allay the few competitive concerns about the deal.
“The legal precedent is not on the side of the FTC,” antitrust attorney Andre Barlow said. “We’ve had at least three judges that have accepted remedies by the merging parties.”
And as Microsoft correctly points out, the deal wouldn’t impact the dominance of companies like Sony and Nintendo, both of which artificially limit the availability of key game titles to their own platforms, in the slightest.
“Sony may prefer to protect the revenues it gets from more expensive individual game sales, but the antitrust laws do not serve to insulate the dominant market player and its favored business model from competition,” Microsoft wrote in a legal filing in late December. “Microsoft’s offers of binding contractual commitments to continue to offer certain titles like Call of Duty to other gaming companies, including Nintendo and Sony, for at least ten years address all of the alleged anticompetitive effects and ensure that there will be no harm to competition or consumers.”
The Activision Blizzard acquisition has already been approved by some countries—like Brazil, Chile, Saudi Arabia, and Serbia—but Microsoft faces stiffer challenges from larger and more important regulatory bodies in the United States and the EU.