The fate of Microsoft’s bid for Activision – one of the first and oldest third-party console video game providers – is now in the hands of a single person. The companies and the Federal Trade Commission spent a week in federal court over its request that a judge stop the deal.
The testimony and closing arguments are now complete. Since last Thursday, long-time Xbox and PlayStation fans have been able to get a glimpse into the fast-paced, tough business world of platform owners and major video game publishers. What’s happening now could not only be a historic moment for video games, but could also impact the way millions of people play them for years to come.
Here’s what you really need to know about the past week, where things are headed and if this mega deal will happen.
What is the next step in the Microsoft-Activision FTC case?
The judge in the Federal Trade Commission’s case against Microsoft over its $68.7 billion acquisition of Activision Blizzard is expected to decide before July 18 whether to block the deal. That’s the deadline for the proposed acquisition of the publisher of Call of Duty. World of Warcraft
The Federal Trade Commission filed a lawsuit back in December to block the deal. This hearing will address the government’s request for an injunction halting all merger activity and preventing its completion. Judge Jacqueline Scott Corley granted the provisional grant on June 13; Her next decision is whether to make this permanent.
The injunction would halt the deal until the FTC’s overall complaint against the Microsoft-Activision Blizzard deal is resolved.
What happens if the judge decides for Microsoft and Xbox?
The takeover would progress and it would become significantly more difficult for the FTC to complete the deal. The FTC would need to evaluate whether the effort is worthwhile, since a decision denying their application would constitute a vote of no confidence in their antitrust case. This case was tried before the FTC’s administrative court apparatus (essentially an internal court) so neither Corley nor her jurisdiction was involved.
Broadly speaking, two other major regulators, the United K ingdom and the European Union, have already issued verdicts on the Microsoft-Activision deal. The UK’s Competition and Markets Authority decided to block it in April; the European Union approved it in May
What Happens When the Judge Rules for the FTC?
Then the deal doesn’t go through, and it’s likely that Microsoft would abandon it altogether and pay Activision a termination fee (estimated at $3 billion). In addition to this penalty, Microsoft attorney Beth Wilkinson said the New York Times that a lawsuit in the FTC’s internal court would be a “three-year administrative nightmare” that would stall the deal entirely, regardless of its decision.
If Microsoft wins, which games will be Xbox exclusives?
With Xbox Chief Financial Officer Tim Stuart on Thursday at the booth, the FTC unveiled a November 2021 Email between him and Xbox Game Studios boss Matt Booty, in which Xbox overall boss Phil Spencer decreed that all ZeniMax games would henceforth be PC and Xbox exclusives.
“Any games in the future?” Stuart replied. “Not just new IP, but ALL future games? Wow.”
So we can pretty much expect the next Elder Scrolls game (which a Microsoft attorney has maybe slips away due to launch in 2026) and will be exclusive to Xbox and PC, although that hasn’t been specifically said yet.
Xbox Game Studios consists of 22 studios, many of which are already developing Xbox-exclusive titles such as the Forza Motorsport or Gears of War series. Several of these studios were acquired in 2018 when Microsoft launched Xile Entertainment (Wasteland), Ninja Theory (Hellblade), and Obsidian Entertainment (The Outer Worlds). inXile’s next game, the action RPG Clockwork Revolution, is exclusive to Xbox. So is Obsidian’s next game, Explainedcoming sometime next year.
As for Call of Duty, Microsoft’s witnesses and attorneys repeatedly emphasized the company’s collaboration with Sony Interactive Entertainment, with an already-signed agreement to keep Call of Duty on PlayStation at the same level of functionality and content “for at least several more years.” In September, SIE boss Jim Ryan rejected the offer as “insufficient”. After that Microsoft offered both to Sony and (remarkably) 10-year deals from Nintendo to offer Call of Duty on their platforms on an equal footing.
At last week’s hearing, FTC Attorney James Weingarten took Spencer under oath to promise to keep Call of Duty on PlayStation platforms. Weingarten pushed Spencer even further, urging him to make that promise regardless of the terms Sony expected, but Corley, sounds impatientWeingarten told him to move on to other issues.
Who will win against the FTC at Microsoft?
observer, analysts, Experts |And the like I’ve had a lot of fun over the past week summarizing the claims and counterclaims made and guessing Corley’s general take on what she’s heard. (She alone will decide; this is not a matter for the jury.)
The FTC has focused almost exclusively on console exclusives as Microsoft’s purchase of Activision hurts the market and consumers. Within this category, FTC attorneys have pinned Call of Duty and what would happen if PlayStation owners lost access to it as the area of most damage.
To that end, the government made strong arguments when it was revealed that Microsoft had bought ZeniMax Media (owner of Bethesda Softworks) out of fear starfield, coming in September, will be exclusive to PlayStation. Instead of this, starfield is available exclusively for Xbox and PC.
But emails and recorded statements from Ryan, the president of Sony Interactive Entertainment, seem to undermine that point. Ryan said he doesn’t consider Bethesda’s exclusivity redfall or starfield be anti-competitive. Additionally, in an email to a colleague, Ryan said, “We’re going to be more than fine.” After speaking to Spencer and Activision boss Bobby Kotick, he said, “I’m pretty sure we’ll be with COD for many years to come.” will see on PlayStation.”
Corley at times appeared to stun FTC attorneys with her questions during closing arguments. Corley pointed to data from Microsoft’s expert, economist Elizabeth Bailey (which appeared under conditions from both sides), which shows that 62% of PlayStation owners don’t play Call of Duty at all. She also chided Weingarten, reminding that “it’s not the harm to Sony that we care about — it’s the harm to consumers.” Representatives from Microsoft and Activision did made this a topic of conversation in the last few months.
“All this for a shooter video game?” Corley later said. “We’re worried about the competition for this one-shooter video game?”
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