Published in Gaming

The government case against Microsoft's Activision Blizzard deal floundering

by on28 June 2023

Experts have difficulty demonstrating that it is bad for gamers

The US government’s case against Microsoft's Activision Blizzard deal got off to a poor start when its witness Harvard economist Robin Lee struggled at times to demonstrate how the planned deal would hurt gamers.

The US Federal Trade Commission has asked a federal judge to stop the transaction temporarily to allow the agency's in-house judge to decide if it can go forward. That said, the side that loses in federal court often concedes, and the in-house process does not go forward.

Lee was pressed by an attorney for Microsoft over the details of his analyses of potential market share gains for the Redmond, Washington-based company’s Xbox division, particularly the effect on gamers who would migrate due to the popular "Call of Duty" videogame which Activision makes.

Lee acknowledged that his analyses did not account for anything but complete exclusivity of "Call of Duty" on Xbox and did not show what may occur if the game was available on Nintendo's Switch. If the deal goes through, Microsoft has pledged to provide the game to Switch for 10 years.

Microsoft attorney Beth Wilkinson pressed Lee to poke holes in his analysis of the deal, pointing out the limitations of his economic modelling. At times the questioning grew testy, including when Wilkinson said forcefully, “Professor Lee, can you answer my question?” on a fine detail of his reports.

Appearing to grow frustrated with the difficulty in parsing Lee's answers, Wilkinson mapped out his market share assumptions on a whiteboard visible to the judge.

The FTC says the transaction would give Microsoft exclusive access to Activision games, leaving Nintendo and Sony Group who are the market leaders out in the cold.

Microsoft has argued that it would be better off financially by licensing the games to all comers.

The deal has won approval from many jurisdictions but has been opposed by the FTC in the United States and Britain's Competition and Markets Authority.


Last modified on 28 June 2023
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