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FTC argues Microsoft’s deal to buy Activision should be paused


By David Shepardson

WASHINGTON (Reuters) -The U.S. Federal Trade Commission on Thursday argued in federal court for a preliminary injunction to temporarily block Microsoft’s acquisition of videogame maker Activision Blizzard, stopping the deal from closing before the government’s case against it is heard.

“If this deal is completed, the combined company … is likely to have the ability, an incentive, to harm competition in various markets related to consoles, subscription services and the cloud (for gaming),” FTC lawyer James Weingarten said in the government’s opening arguments in the first of a five-day evidentiary hearing.

The FTC argues it needs a judge to block Microsoft Corp and Activision Blizzard Inc from closing their $69 billion merger until the agency’s in-house court gets to rule on whether the combination hurts competition in the video game industry.

Microsoft and Activision on Thursday plan to call Matt Booty, head of Xbox Game Studios at Microsoft, and Sarah Bond, Microsoft corporate vice president of gaming ecosystem. The FTC plans to call Pete Hines, who is group senior vice president and head of publishing at Microsoft subsidiary Bethesda Softworks.

Resolving the U.S. lawsuit is one of several key antitrust battles Microsoft and Activision have fought around the world to get the deal finalized. Microsoft’s bid to acquire the “Call of Duty” videogame maker was approved by the European Union in May, but British competition authorities blocked the takeover in April.

The FTC has argued that the deal, which would be the largest for Microsoft and the biggest in the history of the video game business, would give Microsoft the “ability and increased incentive to withhold or degrade Activision’s content in ways that substantially lessen competition.”

In addition, the FTC says the combination would give Microsoft’s Xbox video-game console exclusive access to Activision games, leaving Nintendo consoles and Sony Group Corp’s PlayStation out in the cold.

Microsoft has said that the deal would benefit gamers and gaming companies alike, and it has offered to sign a legally binding consent decree with the FTC to provide “Call of Duty” games to rivals for a decade.

The hearing is scheduled to proceed through June 29. Microsoft CEO Satya Nadella and Activision CEO Bobby Kotick are among the witnesses planned.

(Reporting by David Shepardson and Chris Sanders; Editing by Leslie Adler and Mark Porter)

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