The US Federal Trade Commission is arguing that Microsoft’s acquisition of Activision should be blocked

WASHINGTON, June 22 (Reuters) – The U.S. Federal Trade Commission on Thursday argued a preliminary injunction to temporarily block Microsoft (MSFT.O)’s acquisition of video game maker Activision Blizzard (ATVI.O).

“If this transaction is completed, the combined company likely has … the ability and incentive to damage competition in various markets related to consoles, subscription services, and (for games) the cloud,” said James Weingarten, an FTC attorney. The government’s opening arguments on the first day of the five-day evidentiary hearing.

The FTC argues that it needs a judge to stop Microsoft and Activision Blizzard from closing the $69 billion merger until the agency’s internal court decides whether the combination harms competition in the video game industry.

The FTC says the group will give Microsoft’s Xbox video game console exclusive access to Activision games, leaving Nintendo’s (7974T) and Sony Group Corp’s (6758.T) PlayStation consoles out in the cold.

“I think you’ll see that every piece of evidence shows that it only makes sense for Xbox to make these Activision games available to as many people as possible on as many platforms as possible,” Microsoft attorney Beth Wilkinson said in opening arguments, adding that if an injunction is granted That it could lead to a three-year administrative action that would kill the deal.

Friday is set to witness Microsoft Gaming CEO Phil Spencer, Microsoft Chief Financial Officer Jamie Lover, former Director of Product Management at Google (GOOGL.O) now-closed cloud gaming service Stadia Dov Zimring, and CEO of Sony Interactive Entertainment. Jim Ryan, who will appear via video.

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The resolution of the US lawsuit is one of several major antitrust battles that Microsoft and Activision have fought around the world to bring the deal to a close. The European Union approved Microsoft’s bid to acquire the “Call of Duty” video game maker in May, but UK competition authorities blocked the takeover in April.

The FTC argued that the deal, which would be Microsoft’s largest and the largest in the history of the video game business, would give Microsoft “the ability and increased incentive to withhold or dilute Activision content in ways that significantly reduce competition”.

Microsoft said the deal would benefit gamers and game companies alike, and offered to sign a legally binding consent decree with the Federal Trade Commission to provide “Call of Duty” games to competitors for a decade.

The hearing is scheduled to last until June 29. Microsoft CEO Satya Nadella and Activision CEO Bobby Kotick will be among the witnesses next week.

(Reporting by David Shepardson and Chris Sanders in Washington); Editing by Leslie Adler, Mark Porter, Matthew Lewis and Sonali Paul

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