Microsoft acquired Activision Blizzard King for $69 Billion on 2023-10-13

[eastmen]

The judge has some interesting questions

FTC says it's about driving users to Game Pass. Then claims that ZeniMax is evidence of MSFT's incentive (to foreclose). Judge Corley: let's talk about ZeniMax? which ZeniMax title is comparable to CoD, multiplayer multiplatform title?

FTC says Elder Scrolls is most like CoD. But Judge Corley now notes that ES6 is not yet launched and FTC has to concede MSFT hasn't announced ES6 will be exclusive.

and

FTC now says one can always create a category of one. CoD is unique, only CoD generates huge revenues every year. Then talking about MSFT using content and Judge Corley then says "they*ll use that content to make money".

FTC says difference between exclusivity that is procompetitive and that is not. They say this is not about all exclusives being bad. If Sony gives someone money to make something unique, FTC says it's procompetitive. Money used to make something gamers want.

FTC says acquiring content cuts off whole process of competition because you don't make an investment in something new. Judge wants to know harm to consumers.

This is very much Sony can do no wrong from the FTC.

FTC says there'll be content after the deal, timing issues, exclusives, that favor the Xbox, not the PlayStation.Judge: Let's talk about CoD. Why doesn't Sony acquire another publisher? They make a lot of stuff exclusive. Judge: If Sony actually had a deal for 10 years ...? FTC said they'd still investigate it. But, judge says, here it's about a preliminary injunction (not merely an investigation).

As opposed to now where a marketing deal with COD favors Playstation ?

udge: so the console market then comes really down to CoD and the concern that MSFT will partially foreclose it in a way that people who played it on PS will now have to play it on MSFT (Xbox)?

FTC: yes, one theory is they'll have to buy an Xbox. That*s theory. But other theories are myriad ways to use content to push platform.

Or you know any of the platforms ms have signed binding contracts with over the next 10 years.

Judge now wants to discuss total foreclosure theory. Wants to know how FTC expert Prof Lee came up with that 20% figure (switching rate in foreclosure scenario) that is the key input into his model.

Judge: I just wanna know what actual data ... I*ll tell you, Dr. Bailey looked at actual real-world data

Also it seems that Xbox brazil has released sales / shipped numbers for xbox series



So Xbox one has sold a maximum of 58m units.

It seems that Series S is doing good work for MS as 48% of those users are new to xbox.

 

[Deleted member 11852]

I did say I think that it's worth double if the Activision content gets added.

To you, sure. It seems unlikely that the entire subscriber base of GamePass would be willing to pay twice as much. If Microsoft thought that, they would be charging twice as much now. What about all those for which GamePass is already a financial struggle? At the moment it's in the realm of pocket money in terms of costs, if you can save $2.50 a week, you can afford GamePass.

It's older than that, even. Microsoft was releasing software on Mac since the 1980s.

And threatened to ditch it, then were forced to keep as part of a series on monopolies commitments.

And yet, they had Office and Outlook on Android and IOS while they were still trying to gain a foothold in the modern smartphone OS market. If I remember things correctly, they even had a custom lock screen and launcher for Android around the same time Windows Phone 10 released.

Microsoft launched Windows Phone in 2010, and didn't release Office for iOS until 2014 and Android in 2015. This coincided with internal decision that Windows Phone as a platform was not successful and would be wound down, leaving one last significant update (Windows Phone 10) in 2015, after which only software and security updates were deployed. Ergo, Microsoft were not supporting Office on competing devices before the point when they decided their own platform was being shuttered.

The point I made earlier, is that you do not get credit for actions for are forced upon you by commercial reality.

 

[Shifty Geezer]

This is very true. I am mind-boggled that Microsoft's own counsel was asking Microsoft awkward questions about how bad they are doing. I am sure this will be part of their strategy, in terms of establishing that they are the underdog, but looking at it it felt like they were setting out a pattern of failure after failure and burning through huge amounts of cash with no plan to monetise the investment.

Was the Defence Counsel Kryten?

"Who would allow this corporation, this joke of a corporation, this company who could not outwit a used tea bag, to be in a position where it might control a sizeable part of the console market? Who? Only a yoghurt. This company is not guilty of anticompetitive behaviour; it is only guilty of being Microsoft. That is its crime - it is also its punishment. The defence rests." *

* This is a parody based on the sitcom, Red Dwarf, regarding a legal defence based on belittling the client. It's not anti-MS - don't respond seriously!

 

[Cyan]

The judge has some interesting questions





and






This is very much Sony can do no wrong from the FTC.

I am starting to understand why the FTC doesn't win a f****** trial. Now I am sure Microsoft is going to win, yay.

Some tidbits of today's hearing that caught my attention:

- FTC: We've heard about the damages to Sony...
- The judge interrupts: This is about the damages to the consumer, not to Sony.

- FTC: If Sony decides to deny development kits to Microsoft, this would harm Sony's consumers.
- Microsoft: That's your decision, Sony's.
- Judge: There are testimonies that ask Sony not to delay their development kits (referring to Mojang, to whom Sony did not send the development kits to bring their latest games to the PS5).
- FTC: I don't think we have any testimony on that, Your Honor.
- Microsoft: We don't force Sony to do that. That is your decision. Looks like the FTC speaks for Sony.

- Judge: If Microsoft had limited Call of Duty to Game Pass, wouldn't that encourage Sony to improve its service?
- FTC: If this deal were to go through, it would end Activision's independence and its ability forever to sign an agreement to bring Call of Duty to PS Plus.
- FTC: But buying 100% of Activision would forever close the possibility of reaching a future agreement between Activision and PlayStation... that would be anti-competitive.
- Judge: Again, analyze how the consumer would be harmed. I still don't understand why Sony wouldn't improve PS Plus.

Ultimately, it is incredible how the judge herself has to remind the FTC again and again that they are there to defend consumers, not Sony.

It's obvious that Sony has lost the case, 'cos it makes no sense to defend the company which currently leads the market.

 

[Shortbread]

https://www.washingtonpost.com/politics/2023/06/29/watchdog-group-calls-judge-recuse-ftc-microsoft-case/

A watchdog group is calling for the recusal of the judge presiding over the Federal Trade Commission’s closely watched bid to block Microsoft’s Activision Blizzard deal, citing the fact that her son works for the tech giant, according to a letter shared exclusively with The Technology 202.

The family connection came up at a prehearing conference June 21, when U.S. District Judge Jacqueline Scott Corley said her son works at Microsoft outside of its gaming division, as Law360 reported.

The group, previously a part of the liberal Center for Economic and Policy Research think tank, wrote that the relationship could at least create the “appearance of improper incentives” and at most directly influence the proceedings in violation of the code of conduct for federal judges.

“The public could rightfully become concerned about a judge being improperly biased if the judge’s child is employed by a corporation whose case the judge is overseeing,” wrote the group, which tracks government appointments and federal lobbying efforts.

The code of conduct states that U.S. judges should disqualify themselves in cases in which their “impartiality might reasonably be questioned,” including if a person related to them “within the third degree … could be substantially affected by the outcome of the proceeding.”

Spokespeople for the U.S. District Court for the Northern District of California, where Corley serves, did not return a request for comment. Microsoft, Activision Blizzard and the FTC declined to comment.

Former Republican FTC chairman William Kovacic said that judges “ordinarily would withdraw from the case where a close relative is currently employed with a party before the judge,” even if just to avoid the appearance of impartiality.

Charles Geyh, a law professor at Indiana University who focuses on judicial ethics, argued that the judge was probably on solid ground to stick with the case.
“A rank-and-file employee at Microsoft would probably not have an interest that could be substantially affected by the outcome of this case. … She's right to look at [the fact that] the division that would be affected by the litigation is not where her son is employed,” he said.

The group also wrote that Microsoft, which earlier this year announced it was laying off 10,000 employees, could retaliate against her son if the deal is blocked “while maintaining plausible deniability regarding their motivations,” raising more potential ethical concerns.

Geyh said that could be a concern if “there’s some reasonable evidence or suspicion that that could happen” but that, otherwise, “simply saying it as a possibility doesn't make it so.”

“The fact that there has been no motion to recuse tells us that none of the parties is concerned,” said Stephen Gillers, a law professor at New York University who specializes in judicial ethics.

Jeff Hauser, founder and director of the Revolving Door Project, argued that the agency could have faced blowback if it tried and failed to get Corley to recuse from the case.

“Nothing antagonizes a judge with whom you might have litigation in the future like calling them recklessly biased,” he said. “What are the odds that Judge Corley would recuse if she was already choosing to brazen her way through this apparent conflict of interest?”

Correction: A previous version of this article misstated that the Revolving Door Project is a part of the Center for Economic and Policy Research. Their affiliation ended in March.

And I must add, it would look bad on the FTC to go after President Joe Biden's own United States District Court nominee, especially since the head of the FTC Lina Khan, was nominated by Biden as well for her position.

 

[Shortbread]

I am starting to understand why the FTC doesn't win a f****** trial. Now I am sure Microsoft is going to win, yay.

Some tidbits of today's hearing that caught my attention:

- FTC: We've heard about the damages to Sony...
- The judge interrupts: This is about the damages to the consumer, not to Sony.

- FTC: If Sony decides to deny development kits to Microsoft, this would harm Sony's consumers.
- Microsoft: That's your decision, Sony's.
- Judge: There are testimonies that ask Sony not to delay their development kits (referring to Mojang, to whom Sony did not send the development kits to bring their latest games to the PS5).
- FTC: I don't think we have any testimony on that, Your Honor.
- Microsoft: We don't force Sony to do that. That is your decision. Looks like the FTC speaks for Sony.

- Judge: If Microsoft had limited Call of Duty to Game Pass, wouldn't that encourage Sony to improve its service?
- FTC: If this deal were to go through, it would end Activision's independence and its ability forever to sign an agreement to bring Call of Duty to PS Plus.
- FTC: But buying 100% of Activision would forever close the possibility of reaching a future agreement between Activision and PlayStation... that would be anti-competitive.
- Judge: Again, analyze how the consumer would be harmed. I still don't understand why Sony wouldn't improve PS Plus.

Ultimately, it is incredible how the judge herself has to remind the FTC again and again that they are there to defend consumers, not Sony.

It's obvious that Sony has lost the case, 'cos it makes no sense to defend the company which currently leads the market.

Actually, a judge being critical or asking tough questions of the prosecutors or plaintiffs, isn't necessarily a bad thing or signs that the defendants are winning. Most judges, especially Federal Judges love to impart wisdom or teachable moments towards prosecutors or authority figures on strengthening their arguments in current or future cases. So, I wouldn't necessarily read too much into that.

 

[Deleted member 11852]

And I must add, it would look bad on the FTC to go after President Joe Biden's own United States District Court nominee, especially since the head of the FTC Lina Khan, was nominated by Biden as well for her position.

The judge's son must feel awkward though, his employers biggest acquisition of all time and the decision rides on his mum who just asked some mad questions about videogames of his CEO and one the company's Vice Presidents.

 

[Shortbread]

The judge's son must feel awkward though, his employers biggest acquisition of all time and the decision rides on his mum who just asked some mad questions about videogames of his CEO and one the company's Vice Presidents.

Hopefully, him and his mother have never (and I mean NEVER!) discussed anything pertinent to the case, other than her stating to him (if he asked) that she couldn't discuss anything related to the case, or her feelings regarding the case. Anyhow, Judge Corley is a no nonsense judge, very bright, a quick learner, stands her ground, and very fair in her decisions.

 

[Silent_Buddha]

Actually, a judge being critical or asking tough questions of the prosecutors or plaintiffs, isn't necessarily a bad thing or signs that the defendants are winning. Most judges, especially Federal Judges love to impart wisdom or teachable moments towards prosecutors or authority figures on strengthening their arguments in current or future cases. So, I wouldn't necessarily read too much into that.

But it signals that the court has heard more about the harm to Sony than it has harm to the consumer. Remember, acquisition and merger laws do not care whether a competitor might be harmed it only matter whether consumers will be harmed. The judge is hinting to the FTC lawyers that the FTC is failing to show how consumers will be harmed because they are too focused on how Sony would be harmed.

The judge is also indicating that they've failed to show how Sony would be harmed. Competition is there to force companies to innovate and make their services better. They are questioning why what the FTC has shown wouldn't incentivize Sony to make their services better. That is real competition, it's not about protecting a company from another company, especially if the other company is significantly smaller (half the size) in the relevant market. In other words, ultimately the laws regarding acquisitions and mergers are especially not there to protect a larger market player from a smaller market player if it cannot be shown that there is harm being done to consumers.

The FTC knows they only had a fart's chance in the wind to win the case, but they brought it anyway ... likely because they knew that MS was going to sue the FTC if they didn't. Either way MS would likely win, but at least if the FTC initiated proceedings first, it might work in their favor ever so slightly.

If anything this shows the incompetence of the current head of the FTC, in other words, their failure to truly understand what underpins the laws and legislation governing acquisitions and mergers in the US. Alternatively, if you get into politics in the US, it's about the executive branch attemping to redefine the laws (bypass congress or the congressional branch of government) by greatly broadening how the current laws are interpreted (thus bypassing the courts or the judicial branch of the government). IE - it's a pure power play by the current administration (president or the executive branch of the government) to attempt to do an end run around the limitations placed upon it by the constitution of the US.

So, if the FTC fails, they don't care as Lina Khan has made clear that under her leadership it doesn't matter if they fail almost all of their attempts to block an acquisition if they can at least get one blocked she'd consider that a win. What a colossal and stupid waste of taxpayer dollars that a member of the executive branch of government either does not understand the laws governing trade in the US or is willfully ignoring them.

Regards,
SB

 

[Shortbread]

But it signals that the court has heard more about the harm to Sony than it has harm to the consumer. Remember, acquisition and merger laws do not care whether a competitor might be harmed it only matter whether consumers will be harmed. The judge is hinting to the FTC lawyers that the FTC is failing to show how consumers will be harmed because they are too focused on how Sony would be harmed.

Yes... but the same sentiments can be said when the CMA dropped their concerns dealing with Sony, and still denied the acquisition based on other factors. The Jude doesn't have to accept the FTC claims about Sony or any other potential competitor being harmed by the merger, but she can err on the side that it's users/consumers might be harmed by the merger. Or, she can choose other reasons (which she has the discretion on doing so) not obviously visible or stated by the FTC on allowing the injunction. As I see it, her decision can go either way.

 

[Johnny Awesome]

I'm 70/30 thinking MS wins. Sony's, er... the FTC's case is paper thin.

 

[Silent_Buddha]

Yes... but the same sentiments can be said when the CMA dropped their concerns dealing with Sony, and still denied the acquisition based on other factors. The Jude doesn't have to accept the FTC claims about Sony or any other potential competitor being harmed by the merger, but she can err on the side that it's users/consumers might be harmed by the merger. Or, she can choose other reasons (which she has the discretion on doing so) not obviously visible or stated by the FTC on allowing the injunction. As I see it, her decision can go either way.

Sure, the CMA stated concerns with competition in the streaming market. Again, it cannot be stated enough, in the US it does not matter whether or not a move harms a competitor or the competition. It must be shown that it will harm consumers.

So, for example, if X corporation had no competitors because no competitors could compete at the price that X corporation was offering their service to competitors for, then that would be 100% OK in the US. You can't show that having a low price attractive service to consumers is harming said consumers.

Now if X corporation was artificially increasing the costs to competitors such that it was not possible for them to offer a service at a similar or lower price, then that would be deemed harmful to consumers and the courts would find X competitor guilty because that actually is harming consumers.

What the judge is hinting that the FTC thus far has only shown that the deal could be harmful to Sony (and not very successfully at that), it has not shown that it could be harmful to consumers because it's spending too much time focusing on Sony rather than the consumers (which is what is important in the US).

So, an injunction at this point is highly unlikely. If the FTC comes back for round two, the judge is basically telling the FTC that they need to focus on how this acquisition would negatively effect consumers ... not other companies.

Regards,
SB

 

[eastmen]

I am starting to understand why the FTC doesn't win a f****** trial. Now I am sure Microsoft is going to win, yay.

Some tidbits of today's hearing that caught my attention:

- FTC: We've heard about the damages to Sony...
- The judge interrupts: This is about the damages to the consumer, not to Sony.

- FTC: If Sony decides to deny development kits to Microsoft, this would harm Sony's consumers.
- Microsoft: That's your decision, Sony's.
- Judge: There are testimonies that ask Sony not to delay their development kits (referring to Mojang, to whom Sony did not send the development kits to bring their latest games to the PS5).
- FTC: I don't think we have any testimony on that, Your Honor.
- Microsoft: We don't force Sony to do that. That is your decision. Looks like the FTC speaks for Sony.

- Judge: If Microsoft had limited Call of Duty to Game Pass, wouldn't that encourage Sony to improve its service?
- FTC: If this deal were to go through, it would end Activision's independence and its ability forever to sign an agreement to bring Call of Duty to PS Plus.
- FTC: But buying 100% of Activision would forever close the possibility of reaching a future agreement between Activision and PlayStation... that would be anti-competitive.
- Judge: Again, analyze how the consumer would be harmed. I still don't understand why Sony wouldn't improve PS Plus.

Ultimately, it is incredible how the judge herself has to remind the FTC again and again that they are there to defend consumers, not Sony.

It's obvious that Sony has lost the case, 'cos it makes no sense to defend the company which currently leads the market.

Apparently they also made a claim that if COD on xbox gets skins that aren't on ps5 it makes the version lesser and there fore they foreclosed on sony. It's like do they not know that sony already pays for exclusive skins and other perks for the playstation marketing deal.

 

[eastmen]

https://www.washingtonpost.com/politics/2023/06/29/watchdog-group-calls-judge-recuse-ftc-microsoft-case/

And I must add, it would look bad on the FTC to go after President Joe Biden's own United States District Court nominee, especially since the head of the FTC Lina Khan, was nominated by Biden as well for her position.

It's just more delay. They let it go through without objection so they can use this if they loose to try and force a stall so that MS has to abandon the deal.


This is what happens when there is no real over site to the government. Imagine if MS could actually sue over damages from this case.

 

[eastmen]

Sure, the CMA stated concerns with competition in the streaming market. Again, it cannot be stated enough, in the US it does not matter whether or not a move harms a competitor or the competition. It must be shown that it will harm consumers.

So, for example, if X corporation had no competitors because no competitors could compete at the price that X corporation was offering their service to competitors for, then that would be 100% OK in the US. You can't show that having a low price attractive service to consumers is harming said consumers.

Now if X corporation was artificially increasing the costs to competitors such that it was not possible for them to offer a service at a similar or lower price, then that would be deemed harmful to consumers and the courts would find X competitor guilty because that actually is harming consumers.

What the judge is hinting that the FTC thus far has only shown that the deal could be harmful to Sony (and not very successfully at that), it has not shown that it could be harmful to consumers because it's spending too much time focusing on Sony rather than the consumers (which is what is important in the US).

So, an injunction at this point is highly unlikely. If the FTC comes back for round two, the judge is basically telling the FTC that they need to focus on how this acquisition would negatively effect consumers ... not other companies.

Regards,
SB

Yes the CMA may have a better arguement because of how laws are there. However in the USA for anyone listening the FTC wants to make it so that exclusives for MS are bad but exclusives for Sony and Nintendo don't matter. Further more they want us to believe that Contracts that MS signed aren't worth anything even though MS has always honored contracts even those signed by a company they purchased before the purchase.

This case has gone extremely poorly for the FTC.

My guess based on the questions the judge asked and her interjections is that they wont get the injunction and MS will close the deal.

I am also guessing since the CMA didn't get their delay with CAT , Cat will also send back the CMA decision and likely some compromise will come between the CMA and MS . I am wondering if the CMA says they pushed for 15 year contracts and MS agreeded and then everything is a 15 year cycle and not a 10 or MS signs more cloud deals or agrees to fix the price of game pass or xcloud itself for x amount of years

 

[Silent_Buddha]

Yes the CMA may have a better arguement because of how laws are there. However in the USA for anyone listening the FTC wants to make it so that exclusives for MS are bad but exclusives for Sony and Nintendo don't matter.

No, just no. The FTC doesn't gives a rats behind about Sony. Sony are just a convenient tool to try to stop the acquisition. The whole purpose of the FTC under Lina Khan is to prevent any large acquisitions, period. She doesn't give a rat's arse if it's good or bad for consumers. And she certainly doesn't give a rat's arse if it helps or hurts Sony.

Replace Sony with any other company that seriously objects to this acquisition and the FTC would be parading them out as well. Unfortunately, for the FTC, while there might be some that would like to see the acquisition stopped, they don't want to be associated with how the FTC is going about it and what it potentially means for their corporation/business in the future because they know that the FTC is just itching for a reason to go after them as well and participating in this circus brings them zero benefits and can only serve to hurt them.

Regards,
SB

 

[eastmen]

No, just no. The FTC doesn't gives a rats behind about Sony. Sony are just a convenient tool to try to stop the acquisition. The whole purpose of the FTC under Lina Khan is to prevent any large acquisitions, period. She doesn't give a rat's arse if it's good or bad for consumers. And she certainly doesn't give a rat's arse if it helps or hurts Sony.

Replace Sony with any other company that seriously objects to this acquisition and the FTC would be parading them out as well. Unfortunately, for the FTC, while there might be some that would like to see the acquisition stopped, they don't want to be associated with how the FTC is going about it and what it potentially means for their corporation/business in the future because they know that the FTC is just itching for a reason to go after them as well and participating in this circus brings them zero benefits and can only serve to hurt them.

Regards,
SB

They may not care about sony, however they have brought up only harm to sony many times and the judge has called them on it. They brought it up harm to sony so much that if Sony was Will Smiths wife they'd be smacked silly.

 

[arandomguy]

They may not care about sony, however they have brought up only harm to sony many times and the judge has called them on it. They brought it up harm to sony so much that if Sony was Will Smiths wife they'd be smacked silly.

That's likely because Sony is the one choosing to cooperate with the FTC and a complaintent against the acquisition. My understanding is there is limitations in terms of what the FTC can do and they cannot compel companies to cooperate/side with them (which makes sense). If Nintendo (and others) have no complaint the FTC cannot compel them to testify and/or submit evidence to the contrary (as that wouldn't make sense). Therefore it would essentially just be hearsay for the FTC to complain about harm to say Nintendo. Even worse if Nintendo testifies the contrary due to agreements with Microsoft.

Imagine if the FTC argues harm against Nintendo while Nintendo says/provides nothing to support that (or worse argues the opposite). What would a judge even take away from such an exchange?

This is why it's very common for companies to ultimately negotiate and settle with each other which results in the collapse of these cases (eg. Apple/FTC vs Qualcomm).

 

[see colon]

That's likely because Sony is the one choosing to cooperate with the FTC and a complaintent against the acquisition.

This has no relevance, though. Sony is a competitor, and it isn't the FTC's charge to protect a competitor, it's to protect the consumer. Sony or anyone else can cooperate all they want, but what they have to prove is that the merger is going to harm the consumer. So far the FTC has fixated on harm to Sony.

 

[eastmen]

This has no relevance, though. Sony is a competitor, and it isn't the FTC's charge to protect a competitor, it's to protect the consumer. Sony or anyone else can cooperate all they want, but what they have to prove is that the merger is going to harm the consumer. So far the FTC has fixated on harm to Sony.

Not only that but they are just pointing out the hypocrisy of the situation. In thier example denying a Skin from Call of duty on PS5 would be a negative for Sony, but sony has entered into a contract that does that to MS's platforms. So at the end of the day how would customers be harmed if something exclusive is now just exclusive on another platform. If they are that concerned they can then buy it on the other platform