Activision Won’t Withhold Call of Duty From Sony if Microsoft Deal Closes

Discussions of whether Microsoft would use the acquisition to cut its competitors out of Call of Duty have been at the center of a hearing that started last week.
Discussions of whether Microsoft would use the acquisition to cut its competitors out of Call of Duty have been at the center of a hearing that started last week.

Summary

  • Bobby Kotick tells hearing that PlayStation owners are one of the videogame franchise’s most important groups of users

Activision Blizzard’s popular Call of Duty franchise will remain available for Sony Group’s gaming console if the videogame company is acquired by Microsoft, Activision’s chief told a hearing that could decide the fate of the $75 billion deal.

Activision Chief Executive Officer Bobby Kotick said keeping the game off Sony’s PlayStation console would alienate one of its biggest consumer groups.

“It would cause reputation damage to the company," if Call of Duty was removed from the Sony console, he said. “We’ve always said that we are a multi-platform company and we’d be available on every platform."

The Federal Trade Commission is seeking a preliminary injunction to block Microsoft from closing the deal before the commission makes a call on the acquisition in its in-house administrative court. The proceeding in San Francisco before U.S. District Judge Jacqueline Scott Corley has emerged as one of the biggest challenges for the Biden administration’s more aggressive approach to antitrust enforcement. Corley is a Biden appointee.

Discussions of whether Microsoft would use the acquisition to cut its competitors out of Activision’s wildly popular videogame have been at the center of the hearing that started last week. Critics of the deal are concerned control of the franchise—arguably the most successful ever—could give Microsoft an unfair edge.

A ruling in the FTC’s favor would prevent the two companies from merging and could scuttle the whole deal. Microsoft said during the hearing that it would consider giving up on the deal if it loses, because the FTC’s internal court process, which is scheduled to start in August, could go on for years.

If the FTC loses in the San Francisco courtroom, it might abandon its challenge to the merger rather than proceed and risk further unfavorable precedents.

The FTC is arguing that the deal could stifle competition as control of Call of Duty and other games could give Microsoft the ability to douse competition, including in the burgeoning cloud-gaming market.

Microsoft says the deal would increase competition, in part by bringing Activision’s games to platforms where they currently aren’t available.

While regulators in the European Union, China and other markets have approved the transaction, the U.K.’s Competition and Markets Authority blocked it in April after a monthslong investigation.

The hearing is scheduled to wrap up on Thursday. Jim Ryan, chief of Sony Group’s videogaming business, provided a deposition by video earlier in the week. Sony’s PlayStation leads Microsoft in the console market. It has been among the loudest critics of the deal.

Microsoft announced its plans to buy Activision in January of last year and valued the deal at $69 billion after adjusting for the videogame publisher’s net cash.

The FTC sued to block the deal in December. Microsoft has since offered commitments to make Activision games equally accessible to rival console makers and cloud-gaming companies over a 10-year period. It made agreements with Nintendo, Nvidia and others. It says it has made a similar offer to Sony.

If the court denies the FTC’s request for an injunction, the commission could continue its separate, in-house lawsuit, but the FTC more often drops its opposition to a deal if a judge denies an injunction.

Earlier this year, the FTC abandoned its in-house court proceedings against Meta Platforms’ acquisition of virtual-reality company Within Unlimited after a judge in San Jose, Calif., denied the agency’s request for an injunction.

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