SAN FRANCISCO (AP) – Microsoft Chief Executive Officer (CEO) Satya Nadella is due in court yesterday to defend the company’s proposed USD69 billion takeover of video game maker Activision Blizzard against an attempt by federal regulators to block the deal.
Nadella and Activision Blizzard CEO Bobby Kotick are both scheduled to testify before United States (US) District Judge Jacqueline Scott Corley on the fourth day of a court hearing in San Francisco. The proceedings are likely to make or break what would be the most expensive acquisition in technology history.
The hearing represents a major test of the Federal Trade Commissions (FTC)’s amped-up oversight of Big Tech under Chairperson Lina Khan, who has been outspoken about her belief that US regulators were too lenient in past deals that helped increase the power of companies such as Amazon, Google and Facebook.
The courtroom tussle with Microsoft comes six months after the FTC took Facebook owner Meta Platforms to court in Silicon Valley to try to stop a takeover of a virtual reality fitness company only to be rebuffed by the judge in that case.
Microsoft, maker of the Xbox console, has hailed the deal with Activision Blizzard as a way to make popular Activision games such as Call of Duty more widely available. But federal antitrust enforcers, as well as Microsoft’s main gaming rival Sony, have argued that it would harm competition.
The US FTC is trying to persuade Corley to issue an order that would prevent the takeover from being consummated before a more extensive administrative trial begins on August 2 in Washington. Microsoft is fighting to close the deal ahead of a July 18 deadline that could trigger it having to pay a USD3 billion breakup fee to Activision.
Microsoft struck the deal 17 months ago in hopes of expanding its video game imprint beyond Xbox, which has about half the market share of the longtime industry leader Sony and its PlayStation device.
The FTC has been fighting to block a deal that it fears will enable Microsoft to make popular franchises such as Call of Duty and World of Warcraft exclusive to the Xbox and online subscription services that are becoming an increasingly bigger part of the USD210 billion worldwide video game market. The sector is already larger than the movie and music industries combined.
The court also heard this week from Sony gaming executive Jim Ryan, whose testimony came from a videotaped deposition.