Microsoft Corp. has signaled it plans to challenge the Federal Trade Commission’s lawsuit to block its $75 billion deal for Activision Blizzard Inc., and is expected to argue that it is an underdog in videogame developing.
The personal-computing company has been publicizing its position for months, saying the acquisition wouldn’t threaten competition in the industry because Microsoft trails rivals in videogame consoles and has a limited presence in mobile-game development. The company has also said it expects the industry to get more competitive in the future with the rise of cloud gaming.
Legal experts say Microsoft will likely build its case around those talking points as well as the fact that it is pursuing what is called a vertical merger, meaning it is buying a company in its supply chain as opposed to a direct competitor.
The deal “is fundamentally good for gamers, good for consumers, good for game developers and good for competition," said Brad Smith, Microsoft’s president and vice chair, at the company’s annual shareholders meeting Tuesday. “We will have to present this case to a judge in a court because this is a case in which I have great confidence."
Microsoft has until Thursday to respond to the FTC’s suit, which was filed Dec. 8 in the agency’s administrative court.
In its complaint, the FTC alleged the deal is illegal because it would give Microsoft the ability to control how consumers access Activision’s games beyond the Redmond, Wash., company’s own Xbox consoles and subscription services. The company could raise prices or degrade Activision’s content for people who don’t use its hardware to access the developer’s games, or even cut off access to the games entirely, the FTC said.
“If you can control an important source of content like Activision Blizzard, you have a variety of tools to leverage at your disposal," which could stifle competition, an agency official said earlier this month.
At the shareholder meeting, Mr. Smith challenged the FTC’s concerns that Microsoft’s chief rival, PlayStation maker Sony Group Corp., would be harmed by the deal, saying Sony has too big a lead in the high-performance console space to warrant protection.