Ryuu96 said:
The opposition of MS/ABK to the FTC preliminary injunction request is 244 pages long :p
It includes:
- The legal arguments (around 25 pages long).
- 72 exhibits (lots of them redacted).
- The full commitments to the EC, although the agreements with Nvidia, Boosteroid and Ubitus are redacted.
- The full Sony Corporate Report 2022.
- It mentions at least 3 times the article from FT (from different sources) where Sony chief Kenichiro Yoshida warned about the technical problems of cloud gaming.
- The report from MLex in December 2022 saying that Microsoft didn't mislead the EU over the ZeniMax deal, in response to the FTC concerns.
Lots of reading to do!
I'll keep updating the post during the next few hours with highlights from it. If the opposition is published online, it should be here.
Updating...
The FTC has never persuaded a court to preliminarily enjoin a merger involving anything close to the facts here. Unlike in other merger contexts, the government gets no presumption of harm as to vertical mergers because they do not eliminate a competitor from the marketplace and are widely recognized to be procompetitive. The U.S. antitrust agencies have rarely sought to enjoin vertical mergers and have lost every recent case when they tried. Indeed, the FTC is asking this Court to be the first in decades to find a vertical merger unlawful. (Page 1)
This is the exceptional case where the Court can rely on actions rather than words. Microsoft's valuation of the deal was premised on making Activision's limited portfolio of popular games more accessible. And since the transaction was announced, Microsoft has sought to address any concerns that might be raised about the deal. Here is what Microsoft has done:
- Committed to bring Activision's games to Xbox Game Pass, a subscription gaming service offering numerous games for $9.99 per month, rather than up to $70 per game;
- Signed a binding contract to bring COD to Nintendo (which does not currently have it);
- Offered Valve, the popular digital PC game distributor, a ten-year deal for Activision content, which Valve declined REDACTED;
- Signed contracts to make Activision games available on leading services that "stream" popular games to devices of consumers' choosing;
- Obligated itself, as part of the global regulatory process, to grant streaming rights to current and future Activision games to other cloud gaming services, regardless of whether Xbox decides to stream those games on its own service; and
- Offered Sony a contract to guarantee access to Activision content on PlayStation for ten years, on equal footing with the Xbox console versions, REDACTED; (Page 2)
The FTC simply ignores these facts, claiming that it needs to offer only scant proof to stop the transaction. The FTC is wrong. The government has the burden of proof in seeking the "extraordinary and drastic remedy" of "a preliminary injunction prior to a full trial on the merits." Because the FTC's central claim is that Xbox will withhold Activision content from rivals (principally the market leader, Sony), it must also show that the combined firm would have "the ability and incentive" to foreclose competitors. And the FTC must show that such foreclosure "is likely to substantially lessen competition" in a properly pleaded product and geographic market. On each of these issues, the FTC must show that the evidence "raise questions going to the merits so serious, substantial, difficult and doubtful as to make them fair ground for thorough investigation, study, deliberation and determination." (Page 2)
The FTC cannot come close to carrying its burden. After 18 months of investigation and litigation, including 56 investigational hearings and depositions and the production of nearly 6 million documents, the FTC offers only a minuscule collection of incomplete quotations in support of its motion. The record will decisively refute the FTC's claims. (Page 2)
First, there is no evidence to support the FTC's central theory that Xbox will take COD away from Playstation. The FTC does not cite a single document or witness even suggesting this will happen. On the contrary, Jim Ryan, the CEO of SIE, and the chief commercial opponent of this deal, said privately on the day it was announced REDACTED. Withholding COD would harm Xbox. It would contradict the valuation the Board relied on in approving the deal, which assumed profits from continued Playstation sales. It would cut off highly lucrative income stream to one of Microsoft REDACTED. And it would make COD a worse game and enrage the gaming community, because much of the game's popularity steams from the way it brings together players who use competing consoles. It is therefore unsurprising that every single worldwide regulator that has examined the deal other than the FTC has rejected this theory, including both the EC and the CMA (Page 3)
Third, the FTC has failed to identify relevant antitrust markets, dooming their entire case. Potential anticompetitive effects can be measured only in a properly defined market. But the FTC has replaced sound economics analysis with results-orientated "contort[ions] to meet its litigations meets" Hicks vs PGA Tour. As one example, the FTC claims that gaming's PCs and Nintendo's consoles (both far more popular than Xbox) are not in the same market as Playstation and Xbox, even though the economic evidence REDACTED have said the opposite. Why does the FTC contradict REDACTED in this respect? Because recognizing Nintendo and PCs as part of the market would destroy the FTC's flimsy foreclosure theory: Nintendo has been successful for years without COD, as was the dominant PC game store Valve's Steam. COD cannot be essential to competition if market participants thrive without it. (Page 4) Source: Idas |
