Microsoft Corp. CEO, Satya Nadella and Activision Blizzard Inc. CEO, Bobby Kotick will be in court this week, to try to persuade a federal judge in California to reject the FTC’s effort to block their $69 billion deal. Microsoft CEO Satya Nadella and Activision Blizzard CEO Bobby Kotick are among the witnesses planned for a 5 day evidentiary hearing set to begin this week on the FTC’s legal bid to block the deal, according to a court filing on Tuesday.
Microsoft Activision deal block
The FTC is seeking a preliminary injunction to block Microsoft from completing its $69 billion acquisition of Activision Blizzard. Microsoft has argued that if the court grants an injunction it would effectively kill the deal, which has a termination date of July 18 and contains a $3 billion termination fee that Microsoft would have to pay.
The hearing will begin June 22 and progress through June 29.
US District Judge Jacqueline Scott Corley is presiding at a 5 day hearing in San Francisco starting Thursday over the FTC’s bid to prevent Microsoft from acquiring Activision. While the agency’s legal challenge to the deal is pending. Nadella and Kotick were listed as key witnesses in a joint court filing Tuesday.
Chief Financial Officer Amy Hood and Phil Spencer, who heads Microsoft Gaming, the other top Microsoft executives are expected to take the witness stand, along with Activision’s Chief Financial Officer Armin Zerza, as per the filing.
The CEOs will be defending the blockbuster Microsoft and Activision deal, which would catapult Microsoft to the No. 3 position in the global games market after Tencent Holdings Ltd. and Sony Group Corp., and submit to tough questioning from FTC lawyers.
Sony Interactive Entertainment CEO James Ryan and Dov Zimring, former director of product management for the now shuttered gaming service Stadia at Alphabet’s Google LLC are also amongst the witnesses.
Two executives from Nvidia Corp are also going to testify.
Defending FTC’s bid
It’s uncertain as to when Corley may rule, but a decision could come right after the hearing, which is slated to last through June 29. The deadline for closing the deal is July 18.
FTC attorneys argued that the deal will hurt competition in the markets for console gaming and cloud gaming, which lets gamers stream games to PCs and consoles rather than downloading them, as per the filing. For e.g., Microsoft could exclude Activision games, specifically the popular shooter game Call of Duty, from rival Sony PlayStation devices, which dominate the console market. As per the FTC argument, the transaction would give Microsoft’s video game console Xbox exclusive access to Activision games, leaving Nintendo consoles and Sony Group Corp’s PlayStation out in the cold.
Microsoft claims it shall not limit Call of Duty to its Xbox console. Microsoft also argued that the FTC can’t establish that the nascent cloud gaming market will develop or that Microsoft would be a dominant player in it.
“Our most senior executives will testify in person to answer any questions about our business strategy,” said David Cuddy, a Microsoft spokesman. “This deal means more choice for gamers, a fact that only becomes clearer the more you look at the case.”
Both the CEOs will testify live for 45 minutes, as per the case filing. Nadella will be questioned about the deal and his gaming unit strategy, while Kotick will discuss Activision’s game business and future plans.
The companies didn’t disclose what day or time the CEOs would testify, but the schedule may be discussed at a pre evidentiary hearing on Wednesday.
U.S. authorities are not the only ones who have challenged the deal. UK competition regulators vetoed the merger, though Microsoft is appealing that order.
