WASHINGTON, June 22 (Reuters) – The U.S. Federal Trade Commission on Thursday argued in federal court for a preliminary injunction to temporarily block Microsoft’s ( MSFT.O ) acquisition of videogame maker Activision Blizzard ( ATVI.O ).
“If this deal is completed, the combined company … will likely have the ability, an incentive, to harm competition in various markets related to consoles, subscription services and cloud (for gaming),” FTC attorney James Weingarten said in the government’s opening argument on the first day of a five-day evidentiary hearing.
The FTC has argued that a judge should block Microsoft and Activision Blizzard from closing their $69 billion merger until the agency’s in-house court can decide whether the combination harms competition in the videogame industry.
The FTC said the combination would give Microsoft’s Xbox videogame console exclusive access to Activision games, leaving Nintendo’s ( 7974.T ) consoles and Sony Group Corp’s ( 6758.T ) PlayStation out in the cold.
“I think you can see that every piece of evidence shows that it makes sense for Xbox to make these Activision games available to as many people on as many platforms as possible,” said Microsoft lawyer Beth Wilkinson in opening arguments, adding that if an order is given that could result in a three-year administrative proceeding that would kill the deal.
Set to testify Friday are Microsoft Gaming CEO Phil Spencer, senior Microsoft finance director Jamie Lawver, former director of product management for Google’s ( GOOGL.O ) now-shuttered Stadia cloud gaming service Dov Zimring, and the Sony Interactive Entertainment CEO Jim Ryan will appear. by video deposition.
The settlement of the US lawsuit is one of several important antitrust battles fought by Microsoft and Activision around the world to finalize the deal. Microsoft’s bid to acquire the “Call of Duty” videogame maker was approved by the European Union in May, but British competition authorities blocked the takeover in April.
The FTC argued that the deal, which is the largest for Microsoft and the largest in the history of the videogame business, would give Microsoft the “ability and additional incentive to restrict or degrade Activision’s content in ways that reduce competition. “
Microsoft said the deal would benefit gamers and gaming companies, and offered to sign a legally binding consent decree with the FTC to provide “Call of Duty” games to rivals for a decade.
The hearing is scheduled to continue until June 29. Microsoft CEO Satya Nadella and Activision CEO Bobby Kotick are among the witnesses next week.
Reporting by David Shepardson and Chris Sanders in Washington; Editing by Leslie Adler, Mark Porter, Matthew Lewis and Sonali Paul
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