Home tech Microsoft CEO Nadella tells judge planned Activision acquisition is good for gaming, ET Telecom

Microsoft CEO Nadella tells judge planned Activision acquisition is good for gaming, ET Telecom

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Microsoft CEO Satya Nadella arrives at the Phillip Burton Federal Building and U.S. Courthouse in San Francisco Wednesday, June 28, 2023. Microsoft is defending the company’s proposed $69 billion acquisition of the video game maker Activision Blizzard as federal regulators seek to block the deal. (AP Photo/Noah Berger)

By Matt O’Brien

SAN FRANCISCO: Microsoft CEO Satya Nadella told a judge on Wednesday that Microsoft’s proposed $69 billion acquisition of video game company Activision Blizzard would benefit the gaming industry, comments that are came as he defended the deal against an attempt by federal regulators to block it.

Nadella said Microsoft’s goal was to get Activision games on as many platforms as possible, just like Microsoft has done with its traditional software products.

“I love their games, I love their PC games, and I especially love their mobile games,” Nadella said. Microsoft doesn’t have a huge footprint in mobile gaming yet.

The judge stepped in to ask if Nadella was playing Activision’s Candy Crush on mobile, and the CEO had the courtroom laughing when he said he did.

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Nadella also said that Microsoft was not interested in excluding its rival’s PlayStation by making popular Activision games exclusive to Microsoft’s Xbox.

“There should be no ambiguity in our support for the Sony platform,” Nadella said after testifying in San Francisco court, describing a conversation he had with Sony’s CEO shortly after the announcement. of the agreement.

The remarks were aimed at undermining a major claim by the U.S. Federal Trade Commission, which says the acquisition would harm competition.

Activision CEO Bobby Kotick also testified on Wednesday, stressing that there was no commercial incentive to deny Activision’s blockbuster Call of Duty to Microsoft’s competitors like Sony because such a move would alienate the base. devoted fans of the franchise.

Kotick said it didn’t make sense to make Call of Duty exclusive to Microsoft’s Xbox console or to offer spin-off versions of the military action game on other systems, such as Sony’s PlayStation.

Kotick said removing the game from PlayStation “would cause serious reputational damage”. He added that creating a secondary version for the PlayStation would bring “gamer vitrix” and not something the developers at Activision would do.

Nadella and Kotick testified before U.S. District Judge Jacqueline Scott Corley on the fourth day of the San Francisco court hearing. The shares are likely to make or break the most expensive acquisition in tech history.

It’s important that the deal goes through, Kotick said, noting that 98% of Activision Blizzard shareholders voted in favor of the deal.

The hearing marks a major test of the FTC’s heightened oversight of big tech companies under President Lena Khan, who said US regulators were too lenient in past deals that helped companies like Amazon, Google and Facebook . The courtroom row with Microsoft comes after the FTC sued Facebook owner Meta Platforms in Silicon Valley to try to stop the acquisition of a virtual reality fitness company, which was rejected by the judge in this case.

Microsoft hailed the deal with Activision Blizzard as a way to make popular Activision games like Call of Duty more widely available.

Kotick, who has run Activision since 1991, didn’t quite agree with all of Microsoft’s ideas. During cross-examination by an FTC attorney, he admitted a dislike of multi-game subscription services — such as Xbox Game Pass — which Microsoft hopes to add more Activision games to after the acquisition. But, he said, “I may have a philosophical disagreement with how Microsoft does business.”

The Federal Trade Commission is trying to convince Corley to order a halt to the acquisition before a more comprehensive administrative trial begins Aug. 2 in Washington. Microsoft is fighting to close the deal before the July 18 deadline, which could see it pay Activision a $3 billion severance fee.

Microsoft struck the deal 17 months ago in hopes of expanding its video game footprint beyond Xbox, which has roughly half the market share of longtime industry leader Sony. and his PlayStation.

This week, the court also heard from Jim Ryan, CEO of Sony Games, whose testimony came via videotape.

Recorded in April, Ryan said he initially expressed serious concerns about the acquisition after private conversations with Kotick and Xbox head Phil Spencer. But Ryan said he later came to believe that Microsoft would take advantage of Call of Duty’s popularity to harm the PlayStation.

“The harm to (Sony) comes from gamers abandoning our platform and moving to Xbox,” said Ryan, CEO of Sony Interactive Entertainment. Even though Microsoft is delivering on its promise to keep the game on PlayStation, Ryan said there’s still “some form of degraded experience for PlayStation gamers.”

Microsoft accused the Federal Trade Commission of ignoring the pressure it would face for the company’s games division to generate profit margins that would justify the high price paid for Activision and the potential backlash from savvy video game fans if a popular franchise like Call of Duty were to be blocked from other platforms.

Harvard economist Robin Lee, an expert appointed by the Federal Trade Commission, said Tuesday that this backlash is likely outweighed by the “very significant economic benefits” Microsoft could gain by preventing competitors from accessing Call of Duty. and other popular games, like allowing Xbox users to have older or better versions of the game.

Lee’s testimony led the judge to ask Tuesday whether Call of Duty’s centrality to the case might distinguish the acquisition from other gaming industry deals.

“It’s a unicorn in terms of durability, popularity and numbers,” Corley said. “It definitely stands out. »

Microsoft pointed to commitments already made to make Call of Duty available on the Nintendo Switch console and Nvidia’s game subscription service as proof that the Activision deal will benefit consumers.

Microsoft also tried to prove that Sony was trying to blow up the deal to maintain its giant lead in the gaming hardware market.

Debates are due to end on Thursday. Another major regulator, the UK’s Competition and Markets Authority, has also moved to thwart Microsoft’s takeover.

(Michael Liedtke, technical writer at Associated Press, contributed to this report.)

  • Posted June 29, 2023 8:04 a.m. EST

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