FTC hearing to request a preliminary injunction began this week.

So far it is going well for competition in geneeral and poorly for the FTC. There were some real gems during Phil Spencer's testimony yesterday.

Jim Ryan was too much of a coward to show up in person.

Florian Mueller is attending and live-tweeting during each day of the hearing, which will continue on Tuesday the 27th. There are others live-tweeting as well, but Mueller has been dead on about everything surrounding this deal so far, including the outrage in the UK government that the CMA's decision brought about, so I mostly follow his takes. The is US court also allows people to listen in via a Zoom meeting that is audio only. There are limited spots in the Zoom, but I found a YouTube channel that was streaming it yesterday. Unfortunately I won't be able to listen in next week but I'm sure anyone wanting to listen in could find a stream if you try.

Some highlights below from yesterday from Mueller's tweet thread. I won't link each individual tweet, but his entire 121-tweet thread from yesterday can be found on his Twitter page, linked above, along with his tweet thread from the day before. He also does live Twitter spaces every day after the hearings where he talks about the case and the merger in general. Very informative.

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That FTC lawyer, Weingarten, has just insulted human intelligence. The most stupid question I ever heard a lawyer ask in an antitrust case.

This FTC "case" is an embarrassment for the agency and for the entire United States government. A disgrace. Let me explain:

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After Phil Spencer confirmed that exclusive deals with 3rd-party publishers are more expensive for Xbox due to market share (compensating publishers for skipping a platform), Weingarten suggested it was contradictory to then pay $70B for Activision.

Apples to oranges!

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Phil Spencer then explained why that didn't make sense: if they pay for an exclusive 3rd-party deal, it's just an expense to get an exclusive, but if they buy a company, they get assets.

Sorry @FTC, you are embarrassing yourself with total economic nonsense here!

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Now Judge Corley is also tired of the FTC*s unreasonableness and stupidities;

When the FTC lawyer wanted Phil Spencer to also make a commitment under oath for making games available on the cloud, she cut it off by saying she doesn*t need that.

FTC on the wrong track!

There were audible gasps in the courtroom when the above happened. This was a complete beatdown of the FTC's lawyers. Makes it pretty clear that the judge sees no Cloud competition issues whatsoever and she doesn't even think it's relevant.

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The FTC (a different lawyer) now trying to get support from Google. They called the guy who was in charge of Stadia. Instead of admitting the real reason for Stadia's failure, he obviously just tries to help the FTC against Microsoft.

The FTC called the Google Stadia exec, and Microsoft's lawyers got him to admit that Stadia competed with XBox. This is bad for the FTC (and terrible for the CMA), because they were trying to show there were issues with Cloud gaming competition when that market is virtually nonexistent. The Google guy actually ended up hurting the case the FTC (and the CMA) are trying to make.

Unless there is a complete miracle turnaround by the FTC next week, the judge will not issue a preliminary injunction here and the deal will be able to close in the US before the FTC's administrative hearings.

The deal currently must close by mid-July unless it is renegotiated. If this judge does not issue an injunction against the deal, it is likely that the deal will close over the UK CMA and that MS will hold ABK out as separate in the UK until the appeals there are exhausted.

This post was edited on 6/24/23 at 9:01 pm

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Posted by imjustafatkid

Alabama

Member since Dec 2011

51064 posts

Posted on 6/25/23 at 1:22 pm to imjustafatkid

Another perspective on the hearings from someone who says he is "not the biggest fan of the Microsoft Activision Blizzard acquisition."

LINK

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if Sony and the FTC are doing everything they can to block this deal, they are doing a very, very bad job of it, as evidenced by this week’s hearings.

What exactly happened this week? Where to start.

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An email was revealed from PlayStation head Jim Ryan saying that he did not actually believe Microsoft would remove Call of Duty from the system, and that they would be “more than okay” if the deal went through, contrary to their public statements.

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One of the most tone deaf moments was when the FTC started asking Microsoft about if it meant that acquisition could produce exclusive costumes or items for Xbox and not PlayStation. This is quite literally exactly the kind exclusive content that was produced for PlayStation as a result of past deals from Activision.

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The FTC tried to “gotcha” Phil Spencer by making him swear under oath he would keep Call of Duty on PlayStation and future PlayStations. He then…swore that under oath. They then tried to make him swear the same about other games and the judge was so annoyed by them attempting to do that she cut them off.

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The FTC has shown a poor baseline understand of the industry they’re trying to regulate here by killing this deal. At one point, the FTC asked Sarah Bond if you needed a Windows key to stream video games (uh you do not), in addition to not knowing how existing exclusivity arrangements are made, and how many Sony itself has done over the years, and continues to do.

The FTC called someone from Google Stadia to the stand to testify about cloud gaming, the reason the deal was blocked in the UK. All the Stadia inclusion really proves is that it’s a tiny market with no real audience that’s deeply hard to find footing in. It almost felt like a witness for Microsoft’s side, as they’re trying to show that cloud gaming is a nascent, difficult market and a fraction of this overall deal.

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Even if on its face it’s easy to say “this deal is probably just too big” no one is doing a good job of making a coherent, legal argument for that in court. I would be genuinely stunned if this did not go Microsoft’s way at this point.

This post was edited on 6/25/23 at 1:23 pm

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