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Microsoft-Activision Deal Faces Fresh Hurdles In Appeals Court

The Microsoft and Activision Blizzard merger is one of the largest tech acquisitions in history, but the antitrust suit brought by the Federal Trade Commission (FTC) is heating up with more questions asked of the Microsoft’s lawyer by the U.S. Court of Appeals judge Jennifer Sung.

The judge pressed Microsoft’s lawyer on specifics of whether the company plans to release Activision titles on the cloud and video-game consoles and if any of their actions sufficiently offset any antitrust concerns.

“That’s not actually procompetitive,” Sung said. “That might benefit some consumers, but you can’t equate a benefit to some consumers to a procompetitive effect.”

It took two years fighting regulators for Microsoft and Activision to their gaming deal, but the FTC is not done yet, and is still pushing against the deal with its appeal and an in-house trial.

The agency could be pushing for a unravelling of the deal ultimately, which is rare but not impossible. The FTC is currently working to undo Illumina Inc.’s 2021 acquisition of cancer detection startup Grail.

During the current trial against Microsoft and Activision, the judge emphasised proof in relation to a private suit linked to the deal brought by gamers that had shown the Xbox maker wanted to “spend Sony out of business” by buying up more and more gaming businesses.

Claimants in the case contended their appeal before the same panel without delay before the FTC.

“Microsoft’s gonna get there first, and it’s gonna get there big because it’s got, you know, the best infrastructure,” said had said the Judge, Danielle Forrest.

Microsoft’s “going to make decisions to make sure that it’s the biggest dog in that market forever.”

Microsoft’s lawyer, Rakesh Kilaru, said the FTC is altering its arguments from the trial that took place in the summer, saying that the FTC did not previously claim that Microsoft’s acquisition would result in a monopoly in cloud and subscription gaming. Meaning, they should not be allowed to make that claim now.

“There isn’t evidence in the record that that state of affairs will harm competition,” he said.

FTC attorney Imad Abyad argued this was not the case.

“The district court is not supposed to make findings on disputed evidence,” he said. “If there is disputed evidence, that’s enough to grant relief.”

The FTC was joined by the UK’s Competition and Markets Authority (CMA), which also did not agree with the deal. The CMA even sought to stop the acquisition but altered its case after the ruling made the companies settle.

Collins asked Abyad why the US antitrust authorities were not satisfied with the UK settlement, which resulted in Microsoft agreeing to sell the cloud rights of Activision games that will be released in the next 15 years to Ubisoft Entertainment SA.

“We don’t know whether it would be enforceable in the US,” Abyad said. “We don’t know whether it would be enough to undo the harm in the US market, as opposed to the UK market.”

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