Earlier this month, Microsoft's attempted Activision Blizzard acquisition faced its biggest challenge yet: a lawsuit from the Federal Trade Commission. The FTC lawsuit attempting to block the merger claimed that Microsoft showed it could, and would, withhold content from its gaming rivals.
Yesterday, December 22, Microsoft filed its response to the FTC's lawsuit with U.S. regulators. The tremendous 37-page document response is honed in on one significant counterpoint to the FTC's lawsuit, with Microsoft claiming that the proposed deal wouldn't harm competition in the games industry.
"Xbox started behind Nintendo and Sony when it began making consoles 20 years ago, and it remains in third place today," the introductory segment of the response reads. "Xbox also has next to no presence in mobile gaming, the fastest-growing segment of gaming, and the place where 94% of gamers spend their time today."
The statement reads that Xbox and Activision Blizzard King are "just two of hundreds of game publishers." That is an indisputable fact, but the point the FTC is trying to make here is that Microsoft and Activision Blizzard King would dominate the industry to an extreme, even if they are merely two publishers among hundreds.
“The FTC's disregard for these benefits to consumers and focus on supposed harms to Xbox's deep-pocketed competitors betrays a fundamental disconnect between the FTC's theories and the antitrust laws' underlying purpose, which is to protect competition, not competitors,” the document reads.
“The FTC is asking this Court to protect the world's largest gaming companies from further competition from Xbox, and thereby turning antitrust on its head. Blinded by ideological scepticism of high-value technology deals and by complaints from competitors, the FTC has not only lost sight of the realities of the intensely competitive gaming industry, but also the guiding principles of our nation's antitrust laws.”
In the last few weeks leading up to the FTC's lawsuit, Microsoft proposed a 10-year deal with Sony to keep Call of Duty on PlayStation platforms, which the latter reportedly wasn't happy with. Microsoft even extended this offer to Nintendo, which was no doubt meant to demonstrate the publisher's willingness to cooperate with other platform holders.
For what it's worth, one former FTC chairman said Microsoft's acquisition had a 70% chance of passing regulators and being approved.