The legal battle between Microsoft and the FTC over the $68.7 billion acquisition of Activision Blizzard continues, and the house of Xbox just scored a point, while the regulator is trying to fire back.
In a new order issued by FTC's administrative law judge Michael Chappell, granted Microsoft's motion to reopen discovery and send subpoenas to Sony and Ubisoft on the agreements that pledged that Call of Duty would stay on PlayStation and paved the way to the acquisition as a whole by spinning off some cloud streaming rights to the French publisher.
Microsoft had initially sent these subpoenas independently but the judge initially denied the company's request to enforce them because its counsel actually had not received authorization to do so. As a consequence, Microsoft's counsel filed a motion to be able to reopen discovery and send the subpoenas to Sony and Ubisoft, which the FTC adamantly opposed.
Microsoft intends "to question Sony and Ubisoft witnesses on, among other topics, the negotiations over the respective agreements; the financial and other impact of the agreements; how the agreements are being implemented by the third parties; and the third parties’ understanding of the terms of the agreement."
The order published today mentions that good cause to reopen discovery on the matter exists since Microsoft intends to use the agreements at the upcoming evidentiary hearings to support its defense. Since the FTC was allowed to probe Sony and Ubisoft about the topic, fairness dictates that Micosoft's counsel is offered the same opportunity.
The judge defined the FTC's arguments in opposition to Microsoft's motion with terms like "unpersuasive," "immaterial," "irrelevant" and "misplaced" as he granted the motion.
That being said, the FTC's counsel isn't staying idle and filed another motion seeking an order from the Judge to exclude any evidence and testimonies alleging the procompetitive effect of agreements with third parties from the evidentiary hearing.
The motion seeks to block evidence deriving from the agreements with Ubisoft, Sony, Nintendo, Boosteroid, Cloudware, and Ubitus.
The regulator's argument is that Microsoft has allegedly claimed that no analysis of the effects of these agreements exists and that any such analysis is privileged (IE: can't be publicly shared). According to the FTC, if no such analysis exists, any testimony from executives alleging that the agreements restore lost competition would be "unreliable, lacking foundation, and speculative."
On top of that, the FTC alleges that it would be unfair to allow testimony about the effects of the agreements with Ubisoft and Sony from executives named on Microsoft's witness list, as Microsoft refused to make those witnesses available for depositions.
Lastly, Ubitus, Cloudware, and Boosteroid are foreign and the effect of the agreements involving them is, according to the FTC, irrelevant to how the merger affects American customers.
At the moment, the Judge has not yet responded to the FTC's motion, but it's certainly interesting to see the parties trying to outmaneuver each other by trying to invalidate each other's weapons that would be used at the evidentiary hearing.
While the legal battle between Microsoft and the FTC is ongoing, the acquisition has been closed, and Microsoft is already integrating Activision, Blizzard, and King's management within its own. That being said, technically, the regulator could try to enforce a divestiture if it managed to win in front of the administrative law Judge, albeit it would be a very arduous and time-consuming process.
In the meanwhile, Microsoft will host an event next week in which it'll share its vision for the future of Xbox. Since this is possibly tied to the exclusivity of certain games, it might yet affect this legal battle.
