By Retuers | Updated: 22 March 2023

Microsoft on Monday won the dismissal of a private consumer antitrust lawsuit over its $69 billion (about Rs. 5,70,300 crore) proposed purchase of Call of Duty maker Activision Blizzard, but the plaintiffs were given 20 days to refine their legal challenge.

A federal judge in San Francisco ruled that the lawsuit from a group of video game plaintiffs “lacks allegations” supporting their claim that the proposed acquisition would harm market competition.

“Plaintiffs’ general allegation that the merger may cause ‘higher prices, less innovation, less creativity, less consumer choice, decreased output, and other potential anticompetitive effects’ is insufficient,” wrote US District Judge Jacqueline Corley. “Why? How?”

The decision does not affect the US Federal Trade Commission’s (FTC) regulatory challenge to the largest-ever gaming industry deal. Microsoft announced its bid last year, and it also faces competition scrutiny in the EU and UK. Microsoft has denied the deal would harm video game competition.

US antitrust law allows private consumers to challenge mergers and acquisitions apart from government actions. An evidentiary hearing before the FTC is scheduled in early August.

A spokesperson for Microsoft and lawyers for the company did not immediately respond to messages seeking comment.

Joseph Saveri, a lawyer for the plaintiffs, told Reuters they planned to submit an amended lawsuit “with additional factual detail” to “address all of the ways in which the judge indicated we need to allege more.”

Corley scrapped a planned hearing on whether to issue a preliminary injunction. A status hearing is scheduled for April 12.

The case is Demartini v. Microsoft Corp, US District Court, Northern District of California, 3:22-cv-08991.

For plaintiffs: Joseph Alioto of Alioto Law Firm; and Joseph Saveri of Joseph Saveri Law Firm

For Microsoft: Rakesh Kilaru of Wilkinson Stekloff, and Valarie Williams of Alston & Bird.

© Thomson Reuters 2023

By Reuters | Updated: 22 February 2023

Microsoft President Brad Smith on Tuesday will seek to convince EU antitrust regulators at a closed hearing that the US software giant’s $69 billion (nearly Rs. 5,71,800 crore) bid for Call of Duty maker Activision Blizzard will boost competition.

Smith will lead a delegation of 18 senior executives, including Microsoft Gaming Chief Executive Officer Phil Spencer, while Activision will be represented by its CEO Robert Kotick, a European Commission document seen by Reuters showed.

The hearing will allow Xbox maker Microsoft to gauge the mood among senior EU and national competition officials and European Commission lawyers ahead of the submission of remedies to address antitrust concerns.

“I think we will make clear that our acquisition of Activision Blizzard will bring more games to more people on more devices and platforms than ever before,” Smith told reporters on his way to the hearing.

Microsoft was willing to address concerns with Call of Duty licensing offers similar to the 10-year deal with Nintendo and regulatory undertakings, Smith added, without providing any further details.

Microsoft announced the Activision acquisition in January last year to take on leaders Tencent and Sony, but has run into regulatory headwinds in Europe, Britain and the United States.

Sony, which wants the deal to be blocked, sent its gaming chief Jim Ryan.

Alphabet’s Google and chip designer and computing firm Nvidia, which has a gaming business, also took part in the hearing.

“The European Commission asked for our views in the course of their inquiries into this issue. We will continue to cooperate in any processes, when requested, to ensure all views are considered,” a Google spokesperson said.

Nvidia declined to comment. The European Games Developer Federation, which has said the deal will allow Microsoft to challenge Apple, Google and Tencent, is one of the participants.

Video game distributor Valve, video game publisher Electronic Arts and the German competition watchdog and its peers in Belgium, the Czech Republic, Finland, France, Italy, Portugal, Spain and Sweden will also be taking part in the event.

© Thomson Reuters 2023

By Reuters | Updated: 15 February 2023

Microsoft will make a last-ditch effort to defend its $69 billion (roughly Rs. 5,71,800) bid for “Call of Duty” maker Activision Blizzard in front of EU and national antitrust officials at a closed hearing on February 21, the U.S. software company said on Tuesday.

The company asked for the hearing after receiving a statement of objections from the European Commission warning about the possible anti-competitive effects of the deal.

A Microsoft spokesperson confirmed the oral hearing.

The Xbox maker announced the Activision Blizzard acquisition in January last year to help it compete better with leaders Tencent and Sony, but has run into regulatory headwinds in Europe, Britain and the United States.

Microsoft is expected to offer remedies after the hearing.

It has reached a 10-year deal with Nintendo to make “Call of Duty” available on Nintendo consoles, a remedy aimed at convincing competition enforcers but which has been criticised by Sony, which wants the deal to be blocked.

Last month, PlayStation CEO Jim Ryan met EU antitrust chief Margrethe Vestager to discuss Microsoft’s bid for Activision Blizzard.

The US Federal Trade Commission has sued to block the deal while UK regulators have also expressed concerns, arguing it would give Microsoft’s Xbox exclusive access to Activision games, leaving Nintendo consoles and Sony’s PlayStation out in the cold.

An earlier report suggested that Microsoft argued that the deal would benefit gamers and gaming companies alike, offering to sign a legally binding consent decree with the FTC to provide Call of Duty games to rivals including Sony for a decade.

Michael Chappell, the FTC administrative law judge, will rule on the deal after hearings set for August 2023.

The deal currently faces scrutiny in the European Union which is to decide by March 23 whether to clear or block the deal.

© Thomson Reuters 2023

By Reuters | Updated: 7 February 2023

Videogame publisher Activision Blizzard beat Wall Street estimates for fourth-quarter adjusted sales on Monday, thanks to the success of the latest game in its Call of Duty franchise.

A string of launches in October and November, including

Call of Duty: Modern Warfare II, Warzone 2.0, and World of Warcraft: Dragonflight from the fantastical world of Azeroth, helped the company hold the attention of the gaming community.

As inflation squeezes budgets of American households, more gamers are expected to stick to their favorite gaming franchises, instead of experimenting with newer titles from other studios, helping companies such as Activision, analysts have said.

Modern Warfare II delivered the highest opening-quarter sell-through in the franchise’s history and crossed the $1 billion (roughly Rs. 8,275 crore) mark within 10 days of its late-October launch, the company said.

The company expects its full-year adjusted sales to grow at least in high-single digits, bolstered by the launch of games including Diablo IV.

Adjusted sales in the quarter ended December 31 came in at $3.57 billion (roughly Rs. 29,540 crore), compared with analysts’ average estimate of $3.16 billion (roughly Rs. 26,150 crore), according to Refinitiv data.

Activision’s upbeat results follow drab showings from rival Electronics Arts and Xbox maker Microsoft.

Activision’s $69-billion (roughly Rs. 5,70,100 crore) takeover by Microsoft is being challenged by the US Federal Trade Commission and being investigated by EU authorities. Activision said the companies are continuing to engage with regulators reviewing the transaction.

The end of Blizzard’s long-term partnership with China’s second-biggest gaming firm NetEase will rescind gamers’ access to the World of Warcraft game in the country until an alternative partnership is formed.

That is expected to hit the US company’s net bookings by $250 million (roughly Rs. 2,070 crore) in fiscal 2023, Benchmark analyst Mike Hickey wrote in a note last month.

Fourth quarter net income fell to $403 million( roughly Rs. 3,333 crore), or 51 cents per share, from $564 million (roughly Rs. 4,666 crore), or 72 cents per share, a year earlier.

© Thomson Reuters 2023

By Reuters | Updated: 2 February 2023

Sony Group has nudged up its annual profit forecast, helped by a strong showing for its videogame division, and raised its PlayStation 5 game console sales target by one million units to 19 million for the year to March.

The electronics and entertainment giant also said its chief financial officer, Hiroki Totoki, would become president and chief operating officer from April 1, while retaining his current role.

Incumbent president Kenichiro Yoshida will remain as chairman and chief executive officer.

“I’m obsessed with growth. Any businesses and companies tend to go into a negative spiral if growth stalls,” Totoki told a news conference on Thursday.

“By realising growth, I would like to create a positive spiral where we are chosen by customers and our employees are energised.”

The company said it now expects operating profit for the year to March 31 to total 1.18 trillion yen (roughly Rs. 96,98,900 crore), up 1.7 percent from its previous forecast of 1.16 trillion yen (roughly Rs. 95,34,500 crore).

That remains short of analysts’ average estimate of a 1.19 trillion yen (roughly Rs. 97,80,500 crore) profit, according to Refinitiv data, and just shy of a record profit of 1.2 trillion yen (roughly Rs. 98,62,100 crore) posted a year earlier.

Sony said sales of its Playstation 5 consoles came to 7.1 million units in the October-December quarter, which overlaps with the critical year-end shopping season, up sharply from 3.9 million units a year earlier.

“Various steps we have been taking on both the hardware and software sides are steadily bearing fruit. I believe we are generating positive momentum to re-accelerate growth in our game operations,” Totoki said.

Sony, which competes with Xbox maker Microsoft and Switch provider Nintendo in the game sector, struggled last year to produce enough PlayStation 5 units due to supply chain snarls.

Totoki said risks associated with supply chains have not been resolved yet, and the company boosted game console production sharply in the October-December quarter so it can safely meet demand in the current quarter.

For October-December, Sony posted a 7.8 percent fall in operating profit as its film division fared worse than a year ago, when a blockbuster “Spider-Man: No Way Home” movie drove its profit.

© Thomson Reuters 2023

By Reuters | Updated: 4 January 2023

There are no “substantive” settlement discussions under way between US President Joe Biden’s administration and Microsoft to resolve a legal dispute over the Xbox maker’s $69 billion (roughly Rs. 5,71,900 crore) bid for games maker Activision Blizzard, a Federal Trade Commission attorney said on Tuesday.

The FTC, which enforces antitrust law, asked a judge to block the transaction in early December, arguing it would give Microsoft’s Xbox exclusive access to Activision games, leaving Nintendo consoles and Sony’s PlayStation out in the cold.

FTC attorney James Weingarten, speaking in a brief telephonic pretrial hearing, said there were no “substantive” settlement discussions between the two sides under way.

Microsoft argues that the deal would benefit gamers and gaming companies alike, offering to sign a legally binding consent decree with the FTC to provide Call of Duty games to rivals including Sony for a decade.

The case reflects the muscular approach to antitrust enforcement being taken by the administration of US President Joe Biden. But antitrust experts say the FTC faces an uphill battle to convince a judge to block the deal, because of the voluntary concessions offered by Microsoft to allay fears it could dominate the gaming market.

Michael Chappell, the FTC administrative law judge, will rule on the deal after hearings set for August 2023. Either side can then appeal to the same FTC commissioners who voted to bring the challenge, and then to a U.S. appeals court.

The deal faces scrutiny in the European Union which is to decide by March 23 whether to clear or block the deal.

© Thomson Reuters 2023