Response from MS to the FTC:
https://fm.cnbc.com/applications/cn...221222_9412_Resp_Microsofts_Answer_PUBLIC.pdf
Microsoft asserts the following defenses with respect to the causes of action alleged in the Complaint, without assuming the burden of proof or persuasion where such burden rests on the Commission. Microsoft has not knowingly or intentionally waived any applicable defenses, and it reserves the right to assert and rely upon other applicable defenses that may become available or apparent throughout the course of the action. Microsoft reserves the right to supplement its defenses as discovery progresses.
1. The Complaint fails to state a claim upon which relief can be granted.
2. The Complaint fails to allege a plausible relevant product market or markets.
3. The Complaint fails to allege a plausible relevant geographic market.
4. The Complaint fails to allege undue share in any plausibly defined relevant market.
5. The Complaint fails to allege any harm to competition.
6. The Complaint fails to allege any harm to consumers or consumer welfare.
7. The combination of Microsoft's gaming business with Activision's business will be procompetitive. The transaction will result in substantial acquisition-specific efficiencies, synergies, and other procompetitive effects that will directly benefit consumers. These benefits will greatly outweigh any and all proffered anticompetitive effects.
8. There will be no harm to competition, consumers, or consumer welfare because PUBLIC 33 there is, and will continue to be, entry and expansion by competitors, which is timely, likely, and sufficient.
9. The alleged harm to potential competition is not actionable.
10. The Commission cannot provide clear proof that the combination of Microsoft's gaming business and Activision's business would restrain trade in the alleged markets for "multi-game content library subscription services" or "cloud gaming subscription services" because but-for the proposed transaction, Activision's games would not be available on any such service.
11. The Commission fails to allege a time frame for the alleged anticompetitive effects.
12. The Commission is not entitled to relief because none of Microsoft's conduct identified in the Complaint is actionable—independently or in the aggregate— under the antitrust laws.
13. Microsoft's offers of binding contractual commitments to continue to offer certain titles like Call of Duty to other gaming companies, including Nintendo and Sony, for at least ten years address all of the alleged anticompetitive effects in the alleged markets and ensure that there will be no harm to competition or consumers.
14. The Commission's claims are too speculative to support any claim on which relief can be granted.
15. Neither the filing of this administrative action nor the contemplated relief is in the public interest, pursuant to 15 U.S.C. §45.
16. The Complaint reflects improper selective enforcement of the antitrust laws. PUBLIC 34
17. These proceedings are invalid because the structure of the Commission as an independent agency that wields significant executive power, and the associated constraints on removal of the Commissioners and other Commission officials, violates Article II of the U.S. Constitution and the separation of powers.
18. These proceedings are invalid because adjudication of the Commission's Complaint by the ALJ and the Commission violates Article III of the U.S. Constitution and the separation of powers.
19. The Commission's procedures arbitrarily subject Microsoft to administrative proceedings rather than to proceedings before an Article III judge in violation of Microsoft's right to Equal Protection under the Fifth Amendment.
20. The Commission's procedures violate Microsoft's right to procedural due process under the Due Process Clause of the Fifth Amendment.
21. The structure of these administrative proceedings, in which the Commission both initiates and finally adjudicates the Complaint against Microsoft, violates Microsoft's Fifth Amendment Due Process right to adjudication before a neutral arbiter.
22. These administrative proceedings violate Microsoft's Fifth Amendment Due Process right to adjudication before a neutral arbiter as applied to Microsoft because the Commission has prejudged the merits of the instant action.
23. The Commission's charges under Section 5 of the Federal Trade Commission Act are unlawful to the extent the Commission purports to apply Section 5 beyond the metes and bounds of the Sherman and Clayton Acts.
WHEREFORE, Microsoft respectfully requests that the Administrative Law Judge enter an
order:
1. Denying the Commission's contemplated relief;
2. Dismissing the Complaint in its entirety with prejudice;
3. Awarding Microsoft its costs of suit; and
4. Awarding such other and further relief as the Administrative Law Judge may
deem proper.
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