Microsoft has been having a hard time with the regulatory proceedings over its acquisition of Activision Blizzard. Thankfully, the tech giant scored a small win after an FTC judge denied Sony’s motion to quash the company’s subpoena.
Microsoft served a subpoena to Sony as it build its defense against the FTC lawsuit. The company is seeking details from its chief rival, and also chief opposition to the deal, regarding its third-party exclusivity agreements with game developers.
The said subpoena includes 45 individual requests for Sony documents which include copies of third-party licensing agreements the company has engaged in. Microsoft also requested “all drafts of and communications regarding” SIE president Jim Ryan's declaration to the FTC.
In response, Sony filed a motion to quash or limit the scope of the subpoena. It argues certain information requested are unrelated to the case or too time-consuming and expensive to produce. However, the FTC’s chief administrative law judge has rejected most of Sony’s arguments against the subpoena.
One of the most significant requests made by Microsoft in its subpoena was for Sony to produce copies of “every content licensing agreement [it has] entered into with any third-party publisher between January 1, 2012, and present.” Sony has argued that the requested information has no apparent value and that gathering the documents would mean that the company needs to review 150,000 contract records. It describes this request as “unduly burdensome.”
Microsoft countered that the case involving its acquisition of Activision Blizzard revolves around gaining access to the developer’s IP that could result in Xbox-exclusive titles and could hurt competition within the gaming industry. The tech giant said that it is important to know the full extent of Sony’s exclusivity agreements and “their effects on industry competitiveness.”
The FTC has agreed with Microsoft on this matter. However, the anti-trust regulator ruled that the information requested will be limited to the period between January 1, 2019, to the present.
The FTC also denied Sony’s request not to include files handled by certain staff members. The company argues that many of these employees are Japanese and that the files would be more time-consuming and expensive to search. The FTC said that Sony failed to “persuasively explain why searching for and producing [these] files presents an undue burden.”
The FTC filed a lawsuit against Microsoft and Activision Blizzard in December in an attempt to block the $69 billion deal. The US anti-trust regulator that the deal would allow Microsoft to “suppress competitors” to its console, subscription service, and cloud gaming business.
Sony claims the deal would significantly hamper PlayStation’s ability to compete with Xbox as it would give Microsoft the keys to Activision’s Call of Duty series, referring to the best-selling first-person shooter franchise as "irreplaceable."
Microsoft has countered this by offering Sony a ten-year licensing deal for the Call of Duty game series. The tech giant also extended a similar offer to Nintendo and Steam to convince regulators that it does not intend to make Call of Duty an exclusive title.
The anti-trust regulator revealed that Microsoft has not engaged in settlement talks with the parties involved. The hearing for the case is set to begin in August 2023. Microsoft will be forced to pay $2.3 billion in penalties if the deal isn't finalized by then.