Microsoft’s acquisition of Activision Blizzard has been a tense affair thus far. Parties for and against the acquisition have been trading barbs throughout the proceedings. But, even if Microsoft remains adamant about wanting to buy one of the largest video game publishers, it's since changed its previous stance.
Microsoft’s response to the FTC lawsuit contained strong words against the U.S. regulatory body. The tech giant called the Federal Trade Commission unconstitutional in its response. Microsoft argued that the very structure of the FTC violates the US Constitution.
In its initial filing, Microsoft claimed the FTC lawsuit reflects improper selective enforcement of antitrust laws, referring to the proceedings as:
Invalid because the structure of the Commission as an independent agency that wields significant executive power, and the associated constraints on removal of the Commissioners and other Commission officials, violates Article II of the U.S. Constitution and the separation of powers.
The tech giant is alleging that “procedures arbitrarily subject Activision to administrative proceedings rather than to proceedings before an Article III judge in violation of Activision's right to Equal Protection under the Fifth Amendment.”
Fast forward to today and the world's largest software maker has since corrected its response to the lawsuit by dropping the arguments against the FTC. It still maintains that the lawsuit is a form of selective enforcement of antitrust laws but drops the points calling the regulatory body unconstitutional.
Microsoft also maintains through its revised response that buying Activision Blizzard won't unfairly stifle competition in the gaming industry. Similarly, Activision Blizzard also dropped the argument calling the FTC unconstitutional in its own response to the lawsuit.
David Cuddy, public affairs spokesperson for Microsoft issued a statement regarding the revised filing and the changes made, saying:
The FTC has an important mission to protect competition and consumers, and we quickly updated our response to omit language suggesting otherwise based on the constitution.
We initially put all potential arguments on the table internally and should have dropped these defenses before we filed. We appreciated feedback about these defenses and are engaging directly with those who expressed concerns to make our position clear.
Microsoft took a combative stance against potential lawsuits early in the proceedings as it welcomed the opportunity to defend itself in court. The software giant also lashed out against UK regulators for siding with Sony. Xbox chief Phil Spencer also accused Sony of trying to grow its business by making Xbox smaller.
The arguments questioning the constitutionality of the FTC run contrary to its collaborative approach towards the regulatory body under the leadership of Brad Smith.
Microsoft's latest filing is in line with its previous statements indicating a willingness to work with the regulatory bodies to find a concession that will satisfy all parties involved. On top of this, Microsoft has repeatedly offered Sony a deal to keep the Call of Duty available to its rival for ten years. Microsoft has claimed that Sony is unwilling to strike a deal.
Microsoft is currently awaiting the finding of the UK CMA and EU Commission regarding their respective investigations into the deal. The European regulators have until the end of March to file their reports and take necessary steps to approve or block the deal.
The FTC lawsuit looks to extend the proceedings well into the second half of 2023. The trial is set to commence in August which will be a month too late for Microsoft. The deadline to finalize the acquisition is in July.
Microsoft has made offers to discuss concessions with the FTC to hasted the approval of the acquisition. Reaching a concession is one way of averting a lengthy trial that may scuttle the deal.