(Bloomberg) — The CEO of Micrososft Corp. has reaffirmed his company’s promise to keep Activision Blizzard Inc.’s bestseller, Call of Duty. On Sony Corp.’s PlayStation console. As he sought to defend the largest ever video gaming deal from regulatory attack.
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Microsoft called its CEO, Satya Nadella, and Activision CEO Bobby Kotick to testify in federal court in San Francisco on Wednesday to bolster its argument that the companies’ $69 billion tie-up wouldn’t hurt competition in the console and subscription-based gaming markets. .
The case represents a major test of the US Federal Trade Commission’s ability to block tech deals in court after the agency lost a challenge to the acquisition of Meta Platforms Inc. earlier this year.
Nadella said he would be “100%” committed to keeping the Call of Duty shooter on Sony’s gaming platforms. Last week, Phil Spencer, who heads up Microsoft Gaming, vowed under oath not to exclude the title from PlayStation hardware.
The promises have been made to US District Judge Jacqueline Scott Corley, who must decide whether to halt the Microsoft deal — which has set a closing date for July 18 — while the Federal Trade Commission’s legal challenge to the massive deal begins.
Read more: Activision CEO says pausing Microsoft deal could kill it
While answering questions from Microsoft attorneys and the FTC during nearly 45 minutes on the stand, Nadella shared a light-hearted moment with the judge, who asked him if he was playing Activision’s popular mobile game Candy Crush. “I do,” he said, laughing. and Call of Duty.
How game console makers use exclusive titles to beat competition has been a recurring theme in the FTC v. Microsoft case. Nadella said he personally does not support content privacy on consoles. “If it were up to me,” he said, “I’d like to get rid of the ‘exclusives on keyboards.'”
Sony, the dominant player in the game console market, “identified competition with exclusive offers,” Nadella said. “So this is the world we live in,” he said. “I have no love for that world.”
The FTC argues that the deal would hurt Microsoft’s competitors, including Sony – if Call of Duty is excluded from PlayStation hardware.
The agency also says the deal will dampen competition in the emerging cloud market, which allows gamers to stream games to PCs and consoles instead of downloading them.
Microsoft attorney Rakesh Kilaru asked Nadella if he thought cloud gaming could replace console gaming. The company has argued that the FTC’s interest in cloud gaming is a stretch given the technology is still in development.
“It’s challenging,” Nadella said, explaining that Microsoft’s cloud gaming efforts haven’t “successfully worked out” as the company had hoped.
“Satya has made clear that Microsoft will fulfill its commitments to its partners and the gaming community to deliver more games to more gamers,” Microsoft said in a statement.
Nadella’s testimony came after Kotick told the judge earlier that Activision would likely abandon Microsoft’s takeover bid if the FTC wins a ruling that temporarily halts the deal.
“The opinion of the board of directors is that if the initial injunction is issued, we don’t see how this transaction will proceed,” Kotick said.
Read more: Microsoft’s lineup of exclusive games draws fire from bargain opponents
Kotick disputed the FTC’s argument in the console market. He said taking Call of Duty off PlayStation would be “very harmful to our business,” adding that gamers would “revolt” if the best-selling title was pulled from any gaming platform.
It also showed a lack of enthusiasm for putting Activision’s games on subscription gaming services, a market the FTC believes would be hurt if the deal goes through.
The case is Federal Trade Commission v. Microsoft Corp., 3: 23-cv-02880, US District Court, Northern District of California (San Francisco).
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