February 29, 2024

Microsoft Chief Executive Satya Nadella appeared in federal court on Wednesday, pledging support for open platforms and consumer choice, underscoring the tech giant’s pledge to complete a deal with Activision Blizzard over objections from regulators. ) for a $70 billion takeover.

“If it were up to me, I’d love to get rid of all ‘console exclusivity,'” Nadella testified, pushing back against tech regulators’ claim that Microsoft’s deal to buy the video game giant would limit competition and limit competition. video game on Microsoft’s Xbox console. “I don’t have any love for that world.”

The fourth day of hearings in U.S. District Court in San Francisco was the most high-profile, involving both Nadella and Activision Blizzard CEO Bobby Kotick, in a hearing that could decide the result of the transaction.

The Federal Trade Commission has challenged the blockbuster acquisition, led by its chairman, Lina Khan, in what is seen as a test of the success of more aggressive efforts to rein in tech giants. The FTC is seeking a preliminary injunction preventing the companies from closing the deal before the agency has had a chance to argue the case in internal courts.

Microsoft said such a long delay would likely cause the deal to fall through, a view Kotick echoed in Wednesday’s testimony.

F.TC. Microsoft believes the merger will hurt competition in the video game industry and harm consumers because it could pull Activision Blizzard titles such as Call of Duty from rival Sony’s PlayStation console. Mr. Kotick pledged that he had no intention of doing so, but would ultimately not make a decision if his company was acquired.

“If you were going to remove the game from a platform, you would have a backlash,” Mr Kotick said. “It would cause damage to the company’s reputation.” Nadella also said he would not cancel Call of Duty.

Under Ms. Khan’s leadership, the FTC sued Meta, Microsoft and Amazon, arguing that Big Tech wields enormous power over communications, social media and online commerce, enabling the companies to establish monopolies and harm consumers.

After Microsoft announced its intention to reshape its Xbox business with the acquisition of Activision Blizzard early last year, the company reached an agreement with other video game companies such as Nintendo to show regulators that the deal would benefit gamers rather than restrict access to Activision Blizzard games .

Most government agencies, including the European Commission, are convinced. But the U.S. Federal Trade Commission and Britain’s Competition and Markets Authority are trying to block the deal.

The court battle focused on the practice of exclusivity — releasing a highly anticipated game on only one console. Microsoft has repeatedly promised that it wouldn’t make Call of Duty an Xbox exclusive if it bought Activision Blizzard, and offered Sony a contract guaranteed in writing.

But the FTC argued in court last week that Microsoft moved quickly when it realized Sony might pay to make “Starfield,” a major upcoming ZeniMax game, a PlayStation exclusive, buying the company for $7.5 billion in 2020. ZeniMax Media and its collection of game studios. New ZeniMax games (including Starfield) are now Xbox exclusives.

Sony CEO Jim Ryan testified in recorded video testimony that he believes Microsoft will try to “push PlayStation players to the Xbox platform” even if Call of Duty remains on PlayStation Somehow degrades the Call of Duty experience on PlayStation.

“I believe they’re going to use Call of Duty to hurt us in some way,” Mr. Ryan said.

But Mr. Nadella testified that he opposed the closed-door approach to the game.

“I grew up in a company that always believed that software should run on as many platforms as possible,” he said. “I believe that.”

Microsoft has been trying to portray itself as a commanding third player in a three-player console market dominated by Nintendo and Sony. As a third competitor, Xbox “isn’t a strong business,” said Xbox chief Phil Spencer.

Spencer did admit that Microsoft has discussed the possibility of keeping Activision games other than Call of Duty out of PlayStation.

The U.S. Federal Trade Commission believes that Microsoft’s acquisition of Activision Blizzard will also give it an unfair advantage in game subscription services and the emerging cloud gaming market.

Judge Jacqueline Scott Corley is expected to decide whether to grant an injunction by July 18, the date the deal is expected to close. At times, the questions she asked in court cast doubt on some of the FTC’s arguments.

For example, the FTC tried to get Mr. Spencer to swear that he would keep Call of Duty on the PlayStation for at least 10 years, no matter what terms Sony asked for in the agreement. Judge Corley seemed to find such a blanket promise unrealistic, especially if Sony made some unreasonable demands, such as receiving Call of Duty for free.

“Well, it’s not going to be zero dollars,” Judge Corley said, sounding impatient. “I see.”

david mccabe Reporting from Washington also contributed.

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