Microsoft Reveals Sony Unconcerned About Activision Partnership
Microsoft Corp. has initiated its legal battle with the Federal Trade Commission regarding the acquisition of Activision Blizzard Inc. for $69 billion. The company argued that a Sony Corp. executive had acknowledged that the deal was not intended to harm the PlayStation gaming console’s exclusivity.
The FTC wants to block the deal while its legal challenge is pending, with both sides arguing the case in a five-day court hearing that began Thursday in San Francisco. Microsoft, the maker of the Xbox console, is defending a blockbuster deal that would make it third in the world game market behind Tencent Holdings Ltd. and Sony.
In her opening statement, Microsoft attorney Beth Wilkinson tried to counter the FTC’s claim that the deal would harm competition by reading the content of an email Sony Interactive Entertainment CEO James Ryan sent to a former colleague shortly after the Activision deal was announced in January 2022.
Ryan said the deal was not an attempt to push PlayStation out of the console market, and that after talking with Microsoft and Activision executives, he was “pretty sure we’re going to continue to see” Activision’s best-selling shooter Call of Duty. on PlayStation for many years,” Wilkinson said as he read the email in court.
“we’ll be fine”
“We have good food,” Ryan wrote in an email discussed in court. “I’m not complacent. I wish this didn’t happen, but yes, we’ll be fine. We’ll be fine.”
Microsoft’s main goal in buying Activision, which also offers mobile games such as Candy Crush, is to expand its share of the global mobile game market, which is currently about 0.3%, Wilkinson said.
The regulator claims the deal will harm competition in the console gaming and cloud gaming markets, which can allow games to be streamed to PCs and consoles instead of downloaded. For example, Microsoft could exclude Activision games from rival Sony PlayStation devices, which dominate the console market, the FTC has said.
FTC attorney James Weingarten told U.S. District Court Judge Jacqueline Scott Corley that the combined company has “the ability to harm competition” in the console, subscription game service and cloud gaming markets after the deal. “The myriad strategies available to the combined company to influence its competitors” are at the heart of the case, and it’s not just Microsoft’s potential moves to take games away from other platforms, Weingarten said.
The FTC will present evidence during the hearing that shows the value of mobile gaming is “very little” of the deal and that Microsoft’s attempt to “break the Apple-Google duopoly” in the mobile market is “speculative,” Weingarten said.
CEOs to testify
Matt Booty, head of Microsoft’s Xbox Game Studios, Pete Hines, who heads Bethesda publishing for Microsoft’s games unit, and Sarah Bond, vice president of the Microsoft Xbox game ecosystem, were on the witness stand to discuss Microsoft’s game business strategy. On Friday, the FTC will present video clips of Sony’s pre-recording of Ryan.
Microsoft CEO Satya Nadella and Activision CEO Bobby Kotick are expected to testify in court to defend the deal before the hearing ends on June 29.
