Microsoft CEO says Activision exclusive games ‘make no strategic sense’

SAN FRANCISCO/WASHINGTON, June 28 (Reuters) – The leaders of Microsoft (MSFT.O) and Activision Blizzard (ATVI.O) on Wednesday sought to allay antitrust concerns that the two companies’ proposed $69 billion merger would illegally focus on energy. with Microsoft CEO Satya Nadella saying that making Activision’s games exclusive “wouldn’t make any strategic sense”.

The Federal Trade Commission has asked a judge to block the proposed acquisition because, it says, it would give Microsoft, the maker of the Xbox console, exclusive access to Activision games, which includes the hugely popular “Call of Duty.” The FTC said that would leave Nintendo (7974T) and Sony’s lineup (6758T) out in the cold.

Nadella disagreed with that concern in about 45 minutes of testimony on Wednesday.

“I grew up in a company that always believed that software should work on as many platforms as possible,” he said.

When asked if Microsoft had any incentive to refuse to allow games on Sony’s PlayStation in order to sell more of its Xbox consoles, Nadella replied, “It makes no economic sense and it makes no strategic sense.”

To address the FTC’s concerns, Microsoft has agreed to license its flagship “Call of Duty” to competitors. She also argued that it would be better financially by licensing the games to all comers.

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The FTC asked San Francisco Judge Jacqueline Scott Corley to pause the deal in order to allow the agency’s internal judge to rule on the case. In the past, the side that lost in federal court often conceded and the internal process was overturned.

The Federal Trade Commission, which enforces antitrust law, has taken a tougher line on mergers during the Biden administration to protect consumers from being shut out by powerful companies.

Much of the testimony in the trial focused on Activision’s “Call of Duty,” one of the best-selling video games of all time.

Activision CEO Bobby Kotick testified earlier Wednesday that if Microsoft bought his company and banned other gaming platforms from offering “Call of Duty,” it would alienate many of its 100 million monthly active users and hurt its popularity.

“You’d have a rebellion if you wanted to remove the game from one platform,” Kotick said, adding that it was necessary to deliver the game across multiple platforms, including consoles, mobile phones, and PC.

Kotick argued that there was no incentive for Microsoft, if it closed the Activision deal, to restrict who provides the company’s games. For example, he said removing “Call of Duty” from Sony’s PlayStation would be “very damaging” to Activision’s business.

He also acknowledged that the deal, which he said earlier Wednesday he wanted to close “very badly,” would cause his personal stock to be worth more than $400 million.

The deal has been approved by several jurisdictions, but has been opposed by the US Federal Trade Commission and Britain’s Competition and Markets Authority.

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(Reporting by Diane Bartz in Washington and Greg Bensinger in San Francisco; Editing by Matthew Lewis

Our standards: Thomson Reuters Trust Principles.

Greg Bensinger

Thomson Reuters

Greg Bensinger joins Reuters as a technology reporter in 2022 focusing on the world’s largest technology companies. He was formerly a member of the New York Times editorial board and a reporter on tech beats for the Washington Post and Wall Street Journal. He also worked for Bloomberg News writing about the automotive and telecom industries. He studied English Literature at the University of Virginia and graduated in Journalism from Columbia University. Greg lives in San Francisco with his wife and two children.

Diane Bartz

Thomson Reuters

He focused on US antitrust as well as corporate regulations and legislation, with experience covering the war in Bosnia, elections in Mexico and Nicaragua, as well as stories from Brazil, Chile, Cuba, El Salvador, Nigeria and Peru.

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