Evidence ‘Amply’ Shows Microsoft/Activision Will Harm Competition, Says FTC
The U.S. District Court for Northern California in San Francisco will provide a public audio-only feed of the evidentiary hearing on the FTC’s motion for a preliminary injunction to block Microsoft’s Activision Blizzard buy, said a text-only clerk’s notice Tuesday (docket 3:23-cv-02880). The hearing begins 8:30 a.m. PDT Thursday, and is scheduled to run for portions of five days (see 2306150001).
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Microsoft and Activision's arguments in opposition to the FTC’s proposed injunction “might be persuasive if they were aimed at the applicable law, the FTC’s actual claims and the record evidence,” but they’re not, said the commission’s response Tuesday. They assert the upcoming evidentiary hearing “must decide the merits of their deal, lest they be forced to renegotiate their self-imposed July 18 deadline” for completing the transaction, it said.
But the law, as the court already ruled, is that the FTC needs to present only evidence sufficient to raise serious and substantial questions about the anticompetitive effects of Microsoft’s proposed Activision buy, said the FTC’s response. Microsoft and Activision assert the FTC’s “central claim” is that the combined firm would withhold Activision content from the Sony PlayStation, it said. That’s a “strawman,” it said.
The FTC’s “actual claim” is it’s “reasonably probable” the combined firm would have “the ability and incentive to harm competition,” said the response. The harms would affect current and future competitors, “in several ways in multiple markets where the competitive effects of this transaction will be felt,” including consoles, content subscriptions and cloud gaming services, it said.
Microsoft and Activision “ignore the voluminous record” of evidence developed for the Aug. 2 merits trial, said the FTC’s response. The evidence “amply demonstrates” that the “equities weigh entirely in favor of preliminarily enjoining the transaction,” it said. The FTC raises substantial questions about the legality of the acquisition, it said. The defendants “endeavor to turn the Court away from the correct legal standard at this preliminary proceeding, while failing to dispel the substantial questions that the FTC has raised,” it said.
The FTC intends at the evidentiary hearing to present testimony from senior Microsoft executives, and the agency has “more documents supporting its position than it can feasibly introduce during the hearing,” said the response. Relying on only a fraction of the evidentiary record available in the administrative hearing on the merits that’s set to begin Aug. 2, the FTC at the evidentiary hearing will show that Microsoft/Activision “has the incentive and the ability to harm competition in several well-defined relevant antitrust markets,” it said: “Neither Microsoft’s ex post agreements nor groundless claims of private injury outweigh the public interest in maintaining the status quo until a full administrative trial on the merits.”