Microsoft has taken back some of its stronger arguments vs the FTC in relation to its acquisition of Activision Blizzard King.
When Microsoft revealed the acquisition, regulators from around the world started asking themselves if the size of the deal poses a problem for competition in the video games industry. Most countries have cleared the transaction, but a few key regulating bodies have put the deal up for investigation.
As we know, both the European Commission and the UK Competition and Markets Authority have entered Phase 2 of their investigations. They are both still exploring arguments before deciding if they will let the deal push through. However, the FTC has jumped ahead of the pack by suing Microsoft to stop the deal from going through.
When Microsoft was initially asked to respond to the suit (a legal obligation), they put forth several arguments for approving the deal. Some of those arguments accused the FTC of breaking the rules of the Constitution, as well as FTC’s own by-laws. These are the arguments that Microsoft is now striking off their side.
Microsoft’s spokesperson David Cuddy shared this statement:
“The FTC has an important mission to protect competition and consumers, and we quickly updated our response to omit language suggesting otherwise based on the constitution. We initially put all potential arguments on the table internally and should have dropped these defenses before we filed. We appreciated feedback about these defenses and are engaging directly with those who expressed concerns to make our position clear.”
Activision Blizzard King put forward similar arguments in their response to the lawsuit, and have likewise dropped those arguments now. Our source indicates this action reflects the management philosophy of Microsoft’s current president Brad Smith. Brad is known to negotiate and make deals with rivals, governments and regulators.
This Time profile from 2019 should give more insight on Brad Smith’s impact on the tech world. As Microsoft’s legal counsel in the 2000s, he convinced Bill Gates and Steve Ballmer the company needed to start working with rivals and regulators instead of squabbling with them. In more recent years, he had pushed for initiatives like the CLOUD act, that limits how much data the US government can get from tech companies of consumers, ElectionGuard, a new encrypted voting technology built by Microsoft itself, and the Christchurch Call to Action Summit, an initiative between governments and tech companies to work together to limit violent extremism online.
The same profile also notes that Smith has successfully utilized the goodwill from his actions to help make Microsoft a more successful company. With a man with that particular skillset at the helm, Microsoft may smooth things over with the regulator and get the agreement cleared by the FTC months before their suit pushes through.