FTC Continues Efforts to Halt Xbox-Activision Union

• FTC lodges appeal against Microsoft's acquisition of Activision.
• FTC lawyer argues deal's anti-competitive nature should be obvious.
• Microsoft counters, stating FTC failed to prove exclusivity incentive.
• Antitrust scholars suggest FTC faces uphill battle in blocking merger.
• Potential fallout of appeal unlikely to derail approved acquisition.

A Twist in Microsoft's Acquisition of Activision

Just as we were processing the news of Microsoft's acquisition of Activision two months ago, a surprising update has emerged. The Federal Trade Commission has lodged yet another appeal to halt the union of these tech giants.

FTC's Argument Against the Acquisition

According to a recent report by Reuters, FTC lawyer Imad Abyad argued that the original attempts to halt the deal were subjected to an excessively high standard. This standard required the government agency to demonstrate that the deal was anti-competitive. Abyad believes the monopoly risk inherent in major corporations buying each other should be obvious, referencing Microsoft's exclusivity of Bethesda’s games like Redfall and Starfield to PC and Xbox post its 2021 acquisition.

Microsoft's Response to the Appeal

Microsoft's legal representative, Rakesh Kilaru, countered by stating that the FTC had failed to sufficiently prove that Microsoft had any incentive to make games like Call of Duty exclusive. The judges questioned both attorneys and Abyad's claims for further evidence review after Microsoft's agreements with Sony to keep Call of Duty on PlayStation platforms.

FTC's Uphill Battle

Based on the opinions of two antitrust scholars who followed the appeal, the FTC might be fighting an uphill battle in this final attempt to block the merger. Former FTC general counsel Alden Abbott compared the FTC’s case to accusing a court of ignoring key evidence presented by a witness.

The Potential Fallout of the Appeal

Interestingly, if Microsoft were to withdraw its celebratory merger video, it would be akin to a major corporation having to alter its Facebook relationship status just a few months after changing it to “Married.” However, considering that other territories have approved the acquisition, it seems unlikely that this appeal will be the one to derail the deal. The acquisition, announced in 2022, has been a focal point in discussions surrounding the continued consolidation in the video game industry. Microsoft has been strategically investing heavily to expand its first-party studios. The acquisition will see the departure of longtime Activision CEO Bobby Kotick, a central figure in the company’s 2021 workplace harassment scandal, from his position in 2024.

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