FTC continues fighting Microsoft/Activision deal post-closure

In brief: Microsoft’s historic $69 billion bid to acquire Activision Blizzard closed in mid-October after securing regulatory approval from around the globe. However, the US Federal Trade Commission remains determined to block it, this time by lowering its burden of proof. Analysts say the agency faces long odds.

The FTC introduced new arguments to a California court against Microsoft’s already-completed acquisition of Activision Blizzard this week. The agency’s latest action could be the final challenge to the deal after nearly two years of regulatory proceedings.

Speaking to a three-judge appeals panel, FTC lawyer Imad Abyad disputed an earlier decision requiring the agency to prove that the merger was anticompetitive. Instead, he argued that the FTC only needed to prove that Microsoft had the means and the motive to withhold Activision Blizzard content from rival platforms like Sony’s PlayStation.

The assertion revives the primary concern that threatened to block the deal – that Microsoft would attempt to make Call of Duty exclusive to its Xbox consoles. The company repeatedly pledged to continue supporting Call of Duty and other Activision Blizzard properties like Overwatch and Diablo on PlayStation and Nintendo and has followed through so far.

However, the FTC claimed that Microsoft’s decision to make Zenimax titles like Redfall and Starfield Xbox exclusive after purchasing that company proves it could repeat the pattern with Activision. While Call of Duty, Overwatch, and Diablo had established userbases on PlayStation before the Microsoft purchase, Redfall and Starfield are new intellectual properties – a distinction that might decide how Redmond handles future exclusives. However, Microsoft hasn’t clarified whether it will bring The Elder Scrolls VI to rival platforms.

Microsoft lawyer Rakesh Kilaru called the FTC’s case weak and indicated that the exclusivity concerns are insufficient evidence to challenge the acquisition. Meanwhile, the judges appeared to criticize Abyad’s assertion that the deal required further scrutiny in light of concessions the company made to appease regulators.

Sony and Microsoft signed a decade-long deal to keep future Call of Duty entries on PlayStation. Furthermore, Microsoft addressed concerns from the UK’s Competition and Markets Authority over its dominance in the emerging cloud market by handing Ubisoft cloud streaming rights to Activision Blizzard titles for the next 15 years. The British regulator was the final significant obstacle the company faced before closing the acquisition on October 13.

Antitrust scholars predict that the FTC likely can’t prove that earlier court decisions were in error.