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Microsoft Activision Deal: US FTC Sues to Block $69 Billion Takeover Deal Over Competition Concerns

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Microsoft President Brad Smith said the company would fight the FTC to complete the Activision Blizzard takeover deal.
By Reuters | Updated: 9 December 2022

The Biden administration on Thursday moved to block Microsoft’s $69 billion (roughly Rs. 5,66,800 crore) bid to buy Call of Duty maker Activision Blizzard, throwing a stumbling block in front of the tech giant’s plans to rapidly expand its portfolio of popular games and catch up to bigger rivals.

Microsoft, which owns the Xbox console and game network platform, said in January 2022 that it would buy Activision for $68.7 billion (roughly Rs. 5,64,474 crore) in the biggest gaming industry deal in history.

Without Activision and its variety of games across mobile, consoles and PCs, Microsoft could struggle to attract users to its budding subscription service for accessing games. Drawing subscribers has become a priority for big tech companies as traditional growth sources such as ad sales become less reliable.

The US software company had said it wanted the deal to help it compete with gaming leaders Tencent and PlayStation owner Sony, which has criticised the deal.

But, in its complaint, the US Federal Trade Commission, which enforces antitrust law, said that Microsoft had a record of hoarding valuable gaming content.

“Microsoft has already shown that it can and will withhold content from its gaming rivals,” said Holly Vedova, director of the FTC’s Bureau of Competition

. “Today, we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.”

The agency set a hearing before an administrative law judge for August 2023.

Microsoft President Brad Smith said the company would fight the FTC. “While we believed in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court,” he said.

The Biden administration has taken a more aggressive approach to antitrust enforcement. The US Department of Justice recently stopped a $2.2 billion (roughly Rs. 18,074 crore) merger of Penguin Random House, the world’s largest book publisher, and smaller US rival Simon & Schuster.

“This is more evidence of the administration’s and the antitrust agencies’ war against big tech,” said Andre Barlow of the law firm Doyle, Barlow and Mazard. Both the Trump and Biden administrations have prioritised big tech in antitrust enforcement.

Shares in Activision closed down 1.5 percent at $74.76 (roughly Rs. 6,100), while Microsoft slipped from earlier highs but closed about 1 percent higher at $247.40 (roughly Rs. 20,330).

Activision, which has long dreamt of being a Disney-like entertainment conglomerate, also realized it needed more tech know-how and it could be forced to trim back its roster of games to shift resources into emerging areas such as AI.

Competition concerns

The FTC said that its concern was that Activision’s popular games, including World of Warcraft and Diablo, would not continue to be offered on a range of consoles, PCs and mobile devices.

While Microsoft has suggested concessions to address competition concerns, the rapid pace of change in the tech and gaming industries could make those conditions useless over time.

To woo regulators, shortly after the deal was announced Microsoft unveiled a new set of principles for its app store, including open access to developers who meet privacy and security standards.

This month, in another move to blunt criticism, Microsoft entered into a 10-year commitment to offer Call of Duty, the popular first-person shooter series, to Nintendo platforms. Microsoft made the same offer to Sony.

Antitrust challenges have stumbled when companies put forward a “fix” for antitrust harms being done by a deal, said William Kovacic, a former FTC chair who now teaches law.

“I think we can predict with a high degree of certainty that he (the judge) will listen to those arguments (from Microsoft) and may be sympathetic to it,” said Kovacic.

Chair Lina Khan and the two Democrats on the commission voted to approve the complaint, while Commissioner Christine Wilson, a Republican, voted no.

Activision Blizzard CEO Bobby Kotick told employees on Thursday that he was confident that the deal would go forward.

“The allegation that this deal is anti-competitive doesn’t align with the facts, and we believe we’ll win this challenge,” he told employees, saying that he believed the companies’ arguments would win “despite a regulatory environment focused on ideology and misconceptions about the tech industry.”

The deal also faces regulatory headwinds in Europe.

As of late November, Microsoft was expected to offer remedies to EU antitrust regulators in the coming weeks to stave off formal objections to the deal, people familiar with the matter said. The deadline for the European Commission to set out a formal list of competition concerns, known as a statement of objection, is in January.

© Thomson Reuters 2022

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Social media app Parler returns to Google’s Play Store

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By Reuters, September 3, 2022

Sept 2 (Reuters) – Parler, a social media app popular with U.S. conservatives, is returning to Google’s app store more than 1-1/2 years after the Alphabet Inc-owned company removed it following the U.S. Capitol riots in January 2021.

The app was launched in 2018 and styled itself as a free-speech space for those seeking an alternative to platforms such as Twitter. It quickly gained traction from supporters of former U.S. President Donald Trump.

However, major tech platforms cut ties with Parler for failing to police violent content that led to the attack on the U.S. Capitol by Trump supporters.

The app is now being reinstated after it undertook a series of measures to moderate content on the platform, including features to block abusive users and remove content that could incite violence, a Google spokesperson said.

Parler has substantially modified its app to comply with Play Store’s policies and will be available for download from Friday, the spokesperson added.

The logo for Google LLC is seen at the Google Store Chelsea in Manhattan, New York City

The logo for Google LLC is seen at the Google Store Chelsea in Manhattan, New York City, U.S., November 17, 2021. REUTERS/Andrew Kelly

Sept 2 (Reuters) – Parler, a social media app popular with U.S. conservatives, is returning to Google’s app store more than 1-1/2 years after the Alphabet Inc-owned (GOOGL.O) company removed it following the U.S. Capitol riots in January 2021.

The app was launched in 2018 and styled itself as a free-speech space for those seeking an alternative to platforms such as Twitter (TWTR.N). It quickly gained traction from supporters of former U.S. President Donald Trump.
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However, major tech platforms cut ties with Parler for failing to police violent content that led to the attack on the U.S. Capitol by Trump supporters.

The app is now being reinstated after it undertook a series of measures to moderate content on the platform, including features to block abusive users and remove content that could incite violence, a Google spokesperson said.

Parler has substantially modified its app to comply with Play Store’s policies and will be available for download from Friday, the spokesperson added.
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“Parler has a strong commitment to free speech and despite the market duopoly, is working to provide options and choices for the millions of voices currently being censored or suppressed based on their viewpoint,” said Christina Cravens, Parler’s marketing chief.

To be sure, Parler had made its app available for Android phones through a separate version that could be downloaded on its website after it was removed from Play Store.

Apple Inc reinstated the app on its App Store in May last year. read more

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