Activision (ABK)

What IP Should MS/ABK Bring Back?


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From the lawyer covering the topic…

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New Zealand delays their decision a fifth time! Until April 28th.

Now the final decision from UK, the EU, New Zealand and maybe China is expected in April :p

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Notice of appearance from Sony’s lawyers (4) for the FTC case.

They are working with Cleary Gottlieb, very good law firm.
 
From the lawyer covering the topic…

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Sony has been very relevant on this whole process. They have influenced regulators to investigate particular aspects of the transaction (subscription services or the importance of COD, for example) and they have encouraged regulators to even reject the deal (the CMA, for example).

Nothing wrong with that, it’s part of the game.

But for that reason it makes sense that MS is going after them as soon as possible. My guess is that MS wants to know what Sony has been saying for months to the FTC and how those arguments have been presented. Therefore, MS is probably looking for the exchange of communications with the FTC and other parties (emails, transcript calls, SMS, messages, etc), experts reports, depositions from experts and representatives/executives from the company, financial data and all the documents presented to the FTC to argue that the transaction is anticompetitive.

And well, this is one of the risks of a third party going against a transaction, that your documents and testimonies can become public once the case is in court.

We’ll see what Sony says this Friday.
 
From the lawyer covering the topic…

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Sony wants to fight against consolidation in the industry? 🤔


Sony Interactive Entertainment, which is fighting Microsoft's proposed acquisition of Activision Blizzard, hired Platinum Advisors DC to lobby on antitrust and mergers and video game industry issues. Daniel Sepulveda, former deputy assistant secretary of State in the Obama administration, will work on the account.

Platinum Advisors DC is a government relations and lobbying firm.
 
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  • FTC lawsuit came hours after call with European counterparts
  • Brussels officials indicated their intent to hold remedy talks

The US Federal Trade Commission filed its lawsuit to block Microsoft Corp.'s $69 billion takeover of gaming company Activision Blizzard Inc. in December partly to get ahead of its European counterparts and dissuade them from accepting a settlement allowing the deal, according to people familiar with the investigations.

The FTC filed a complaint challenging the merger on Dec. 8, hours after a call between US and EU officials about their respective probes, said one of the people, who asked not to be identified because the discussions were confidential. The EU officials indicated on the call they intended to begin talks with Microsoft about potential remedies, the person said.

That prompted the FTC to file its case the same day to send a strong signal to EU Competition Commissioner Margrethe Vestager and her staff, the people said, even though technically the commission wouldn't entertain remedy proposals from the companies until later in the process.

Officials from the European Union and the UK aren't expected to decide on the deal until April, and typically US officials would wait until closer to the deadline and try to work out a global resolution. People close to the transaction said they weren't expecting action from the FTC until the spring.

By moving quickly, the FTC would be able to "get out in front of the Europeans in an effort to shape the narrative," said Barry Nigro, who served as the No. 2 antitrust official at the Justice Department during the Trump administration and now heads the antitrust practice at Fried Frank Harris Shriver & Jacobson LLP. He isn't involved in the Microsoft-Activision case.

The FTC declined to comment. The EU didn't immediately respond to an email request for comment sent after hours. Microsoft pointed to comments President Brad Smith made when the FTC filed its case: "Even with confidence in our case, we remain committed to creative solutions with regulators that will protect competition, consumers and workers in the tech sector."

Microsoft's Activision takeover requires approval from 16 jurisdictions, with the US FTC, the UK's Competition and Markets Authority and the European Commission representing the biggest hurdles. The three international agencies have been in close contact on the deal since it was announced in January 2022.

The European Commission is conducting an in-depth probe and plans to make its decision by April 11. The commission is expected to issue a so-called statement of objections in the near future, setting out potential reasons for blocking the deal if no remedies are forthcoming. Such filings are routine in big deals and don't necessarily indicate a transaction is headed for a veto.

The UK regulator is also reviewing the transaction and plans to issue a preliminary decision later this month or early February, with a final decision on April 26.

Microsoft intends to propose a global remedy package to EU competition officials that would guarantee Sony Group Corp.'s PlayStation would continue to have access to the popular Call of Duty game for the next 10 years. Sony has so far rebuffed Microsoft's offers. The Xbox maker has also entered into a deal to bring the game to Nintendo Co. and allow it to be sold by Valve Corp.'s PC gaming platform Steam. If EU officials accepted that remedy, which would apply globally, it could potentially undermine cases brought in the US or UK.

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From the lawyer covering the topic…

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So, our speculation was right:

- MS delayed in November the deadline with the EC to avoid the SO and close the deal by the end of 2022/early 2023
- That's why Reuters reported in mid November that MS was going to offer remedies to the EC
- MS was probably expecting the challenge from the FTC (in early 2023) and that was a defensive move against them
- That way, if the FTC wanted to block, they would have to go to federal court and not the administrative one
- That move would also help with the CMA, putting pressure on them
- But the FTC rushed the process just to be the first to challenge the deal, avoid federal court and set the tone for the rest

No wonder that the EC responded so quickly to the FTC arguing that MS lied to the EC with the Zenimax case.

I don't know, this sounds a bit unprofessional to me. No doubt that the legal teams from MS weren't very happy with the FTC acting this way.
 

Sony's gaming chief Jim Ryan met EU antitrust chief Margrethe Vestager on Wednesday to discuss Microsoft's (MSFT.O) $69 billion bid for "Call of Duty" maker Activision Blizzard (ATVI.O), a person familiar with the matter said on Thursday.

The meeting came as the EU competition watchdog prepares to warn Microsoft this week about the potential anti-competitive effects of the U.S. software giant and Xbox maker's acquisition in the biggest gaming industry deal in history.
 
From the lawyer covering the topic…

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MLex has a brief report about the meeting:

- Different executives from Sony met Verstager.

- Sony's delegation was led by Jim Ryan.

- Sony pressed again their case for a block.

- Same old arguments: 1) MS could withhold Call of Duty from other consoles or platforms; 2) MS might degrade how Call of Duty works with other gaming platforms.

- Statement of Objections coming this week (it has to be tomorrow).
 
From the lawyer covering the topic…

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According to MarketScreener, MS said on Tuesday that they still expect the deal to close on fiscal year 2023 (June 30th). Interesting 🤔

And I see that Michael Moiseyev, the lawyer leading at Weil, Gotshal & Manges the case for MS, has been shortlisted for "Lawyer of the Year" at the Global Competition Review Awards 2023 (precisely for his work advising Microsoft on the acquisition).
 
From the lawyer covering the topic…

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According to MarketScreener, MS said on Tuesday that they still expect the deal to close on fiscal year 2023 (June 30th). Interesting 🤔

And I see that Michael Moiseyev, the lawyer leading at Weil, Gotshal & Manges the case for MS, has been shortlisted for "Lawyer of the Year" at the Global Competition Review Awards 2023 (precisely for his work advising Microsoft on the acquisition).
Don't see why it wouldn't close.
 
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From the lawyer covering the topic…

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It looks like we'll have to wait until next week to know what the SO says. 🤔

I think that it was issued this week because Reuters, DealReporter and MLex reported that it was coming this week (and you don't pay thousands of euros per year to the last two to get bad info). But we got no leaks yet 🤷🏻‍♀️

If the provisional findings from the CMA are also published next week, the beginning of February is going to be intense :p xD

While we wait, some readings for the weekend:

- A legal analysis about the decision from Chile in contrast to the decision from the FTC (in Spanish and English).

- Wedbush analyst Nick McKay expects the deal to close and updated ABK's rating on Friday.

- The post from FOSS Patents includes a tweet from the CEO of The Capitol Forum questioning the article from Bloomberg about the FTC rushing the lawsuit to influence the EC:



This week the DAMITT 2022 Annual Report, a famous report about merger trends, was published. You can check it here. The MLex insight had a few quotes from the authors and one of them was about the ABK case:

"Mike Cowie (a partner of the firm) also signaled that the Microsoft-Activision deal – which the FTC sued to block in December – will be an interesting one to follow this year.

"That is a vertical case that was brought over a well-reasoned objection from a commissioner," Cowie said, referring to Commissioner Christine Wilson's objection to the complaint."


As far as I know, Christine Wilson's objection to the complaint hasn't been published yet.

- Big Tech in the US is happier this week because previous ranking Republican on the House antitrust subcommittee, Ken Buck, has been passed over for the chairmanship in favor of Kentucky Republican Thomas Massie. It signals a shift away from a focus on policing concentrated corporate power and toward greater effort to rein in the federal government itself.

I mean, Massie has previously opposed increased appropriations for the FTC and Department of Justice, going so far as to question the need for companies to receive government approval for any mergers. 😬

- The Platform Law, the blog of Geradin Partners, a boutique competition law firm based in Brussels, published an interview with Sarah Cardell, the recently appointed CEO of the CMA. Some interesting quotes:

The CMA has currently six antitrust investigations into the Big Tech players. You also now have an ongoing market investigation into cloud gaming and mobile browsers. The CMA has very wide remedy powers in cases such as these. Are you able to explain how such remedies would interrelate with the DMU regime?

It is too early to say exactly how this would work as it depends in part on the detail of the DMU legislation. However, it is something that we are very conscious of, and are taking into account when we think about possible remedies in our existing cases.

[...]

But in the meantime, we will keep pushing forward the existing cases to deliver for consumers as fully as we can within the existing legislative frameworks, trying to tackle the specific targeted issues we have identified in our live cases. The added benefit of these cases is that they enable us to greatly improve our understanding of the harms in digital markets, which could potentially shape the DMU's approach once the powers are in place.

As you know, the UK initially led the way on these issues to some extent when the Furman Report was published back in early 2019. The CMA then published its widely praised market study reports on the digital sector, and launched various digital cases, but the key legislative process seemed stalled. There was a concern voiced by your predecessor, Andrea Coscelli, that the UK could fall behind the EU and therefore become a "rule taker". Given where we are now, do you think the UK can catch up and resume its place amongst the global leaders on these issues? If so, can you please explain how you see the UK and EU processes matching up?

[...]

What this means, though, is that we need to think about coherence with regulations in other jurisdictions and cooperation with international counterparts is more important than ever. Not just with our colleagues in the EU, but across the globe. We're therefore watching international developments carefully and we will of course take account of them, and it is important that we do so in a way that helps to shape a coherent regulatory landscape that supports innovation and benefits consumers. We will also continue to build and maximise relationships between competition authorities to exchange knowledge and inform our views and approaches. For instance, as part of the UK's G7 Presidency in 2021, the CMA with G7 colleagues and guests published a Compendium of approaches to improving competition in digital markets whichprovides an overview of how different authorities are working to promote competition in digital markets. This was updated in November last year by the German Bundeskartellamt as part of their G7 Presidency.

In recent years, the CMA has acquired a reputation for being probably the fiercest authority worldwide in merger control. For example, it was the only authority to block the Meta/Giphy merger and it blocked the Cargotec/Konecranes merger after the EU had cleared it with remedies. Indeed, the CMA has blocked or imposed remedies in more than three-quarters of its recent Phase 2 mergers. Can we expect the CMA's current merger policies to continue over the coming years?

Our standards are clearly set out: for the CMA to block a merger or impose remedies, it has to find that it is 'more likely than not' that the merger would lead to a substantial lessening of competition. In the past year (2021/22), the CMA looked at more than 800 mergers as a result of its expanded role post- Brexit but only referred 10 mergers for a Phase 2 review, with no increase in the proportion of mergers being blocked. Out of the hundreds of deals done by big tech firms, Meta/Giphy is the first one in which the CMA has intervened. Others have either gone through without the need for an investigation or have been cleared following an investigation, such as Microsoft/Nuance and Facebook/Kustomer.
 
From the lawyer covering the topic…

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In the worst case scenario, we are two weeks away from “the end” (provisional findings from the CMA + Statement of Objections from the EC).

In the best case scenario, we are 1-4 days away from both :p

So, keep calm and brace for impact because no doubt that it’s coming very soon.
 
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From the lawyer covering the topic…

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Endgame is coming 👀

While we wait for it :p, new notice of appearance from Sony’s lawyers and the order granting the second extension of time.

Now Sony has until Wednesday to respond to the subpoena from MS.

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Notice of appearance from (2) Nvidia’s lawyers.

So, Nvidia is officially part of the administrative complaint from the FTC.
 
From the lawyer covering the topic…

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Endgame is coming 👀

While we wait for it :p, new notice of appearance from Sony’s lawyers and the order granting the second extension of time.

Now Sony has until Wednesday to respond to the subpoena from MS.

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Notice of appearance from (2) Nvidia’s lawyers.

So, Nvidia is officially part of the administrative complaint from the FTC.
IF SONY decides not to respond to the subpoena, what happens?