Heisenberg007
Gold Journalism
Pretty much, especially in the context of COD and this acquisition.
Microsoft / Activision Deal Approval Watch |OT| (MS/ABK close)
- Status
ToadMan
Member
The FTC has a 100% success record in the adjudicative court process - thats where the injunction against MS was successfully applied and where the hearing will take place. So "chances are" the FTC win there yet again when it comes to MS.
It would be an unusual outcome if the FTC lost - like it or loathe it their adjudicative court process makes them judge, jury and executioner.
The SC action is brought by a company - Axon I think - that already fell foul of that adjudication process. MS tried to use the same argument as Axon and quickly retracted it.
The federal court injunction the FTC lost with Meta is appealable and the FTC still has the option to use the adjudicative court too.
The Meta - Within acquisition is done now, but if the FTC were to retrospectively rule that acquisition illegal, then Meta would be forced to divest and leave themselves open to various damage claims. I don't think that'll happen - just pointing out that the road is risky if your case for acquisition isn't iron-clad and even the day the deal is done, it could still be challenged and subsequently undone.
To be honest, the Meta - Within case doesn't seem to be a big deal right now to me, and Meta have a history of doing acquisitions that are legitimate business moves.
The MS-ABK deal is a totally different beast and clearly illegitimate - busting this kind of deal is what careers are built on and its open and shut. The FTC isn't going to risk that win by going to federal court if they can help it.
But in truth, the CMA decision means this is unlikely to get to any court hearing in the US now.
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ToadMan
Member
When you're buying an ABK game - CoD for example, what options do you see?
Now, you understand.
ToadMan
Member
And there still isn't.
The question is which demographic is affected by the potential acquisition.
Here is what the CMA says
"
7.75 The evidence shows that Xbox, PlayStation and Nintendo all compete in the console market on the basis of technical specifications, content (including range and type), and price.
7.76 The evidence also shows, however, that whilst Xbox and PlayStation compete closely with each other, Nintendo competes less closely with Xbox and PlayStation:
(a) Microsoft and SIE offer non-portable consoles with similar technical specifications. Nintendo's flagship console, the Nintendo Switch, offers a portable console for a lower price and with significantly lower technical specifications.
(b) Whilst Nintendo offers some content for a mature audience, its most popular titles are targeted at a family audience.
(c) Gamers more often own a Nintendo console and an Xbox or PlayStation than own an Xbox and a PlayStation. This suggests that Nintendo is less substitutable with Xbox or PlayStation than the latter are with each other.
"
The CMA is pointing out what we all know here (well I'm beginning to doubt some people here have any knowledge of gaming at all - or they are cheerleading for MS for "reasons" but I digress).
The switch is a console - yes. Ting get a star.
The switch has its own demographic and marketplace. Ting - yes also correct.
Putting COD on switch is in no way mitigation of this deal because
1. It's not a close competitor to MS as their own internal documents show
2. There is no existing market for COD on switch so taking it exclusive makes zero difference to Switch consumers today. I.e. Nintendo and Switch users don't have a stake in COD.
3. As the switch is so technically different to PC and modern consoles, COD on that platform will be a significantly different experience that cannot compete with an exclusive xbox/PC version.
Therefore, for this comparison (COD on Switch) in particular, Switch is not a significant consideration.
But you know, thinking and comprehension relating to this is way beyond "developers developers developers" so yeah.
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DForce
NaughtyDog Defense Force
They probably told him to shut up because he keeps contradicting himself through the media.
ToadMan
Member
A happy accident.
He hasn't even tweeted how great the latest Last Of Us episodes have been lol.
Heisenberg007
Gold Journalism
Considering the delicate situation they are in right now with the CMA, the Legal department likely asked him to stay off media and interviews until this is all officially over.
It's worth remembering that it's Phil's previous statements that actually worsened their case for the ABK acquisition. So anymore mishaps can create further problems for Microsoft.
Hero of Spielberg
Member
I see it available on Xbox and PS and MS have committed to keeping that and bringing it to Switch if the deal went through, so …
Hero of Spielberg
Member
Which is different than what has been argued on here, hence my comments
Regardless, Ive already stated I don't think the deal is going through, I just disagree with aspects of the FTCs and CMAs decisions.
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Ass of Can Whooping
Member
No it wasn't.
Say what you want about their output, but Microsoft offers endless entertainment, following in the footstep of Dunder Mifflin.
Microsoft: "We are in third place"
CMA: "False"
Microsoft: "Nintendo is a close competitor to Xbox"
CMA: "Do you really think we are so stupid?"
Microsoft : "Nintendo is fine without COD"
CMA: " Because is not a close competitor to Xbox and PlayStation"
Microsoft: "But ..."
CMA: "Shut up, kid"
CMA: "Xbox and PlayStation are similar in terms of their technical specifications"
CMA: "The Nintendo Switch is a portable device that contains its own monitor, and is also significantly cheaper"
CMA: "Publishers say that developing a game for Switch is a significantly different task relative to doing it for Xbox and PS"
CMA: "Third parties noted that Nintendo makes its proposition sufficiently differentiated from other gaming ecosystems"
CMA: "The evidence we have seen suggests that Nintendo's most popular titles are targeted at a family audience"
CMA: "Switch is less substitutable to the PlayStation or Xbox"
CMA: " PlayStation and Xbox are closer substitutes"
CMA: "Nintendo is not as close as competitor to Xbox and PlayStation"
Microsoft: "We are in third place"
CMA: "False"
Microsoft: "Nintendo is a close competitor to Xbox"
CMA: "Do you really think we are so stupid?"
Microsoft : "Nintendo is fine without COD"
CMA: " Because is not a close competitor to Xbox and PlayStation"
Microsoft: "But ..."
CMA: "Shut up, kid"
CMA: "Xbox and PlayStation are similar in terms of their technical specifications"
CMA: "The Nintendo Switch is a portable device that contains its own monitor, and is also significantly cheaper"
CMA: "Publishers say that developing a game for Switch is a significantly different task relative to doing it for Xbox and PS"
CMA: "Third parties noted that Nintendo makes its proposition sufficiently differentiated from other gaming ecosystems"
CMA: "The evidence we have seen suggests that Nintendo's most popular titles are targeted at a family audience"
CMA: "Switch is less substitutable to the PlayStation or Xbox"
CMA: " PlayStation and Xbox are closer substitutes"
CMA: "Nintendo is not as close as competitor to Xbox and PlayStation"
Astray
Member
Genuinely sounds to me like a lot of the doubts about CMA's approach to this are stemming from the redactions and how we can't see them.Say what you want about their output, but Microsoft offers endless entertainment, following in the footstep of Dunder Mifflin.
Microsoft: "We are in third place"
CMA: "False"
Microsoft: "Nintendo is a close competitor to Xbox"
CMA: "Do you really think we are so stupid?"
Microsoft : "Nintendo is fine without COD"
CMA: " Because is not a close competitor to Xbox and PlayStation"
Microsoft: "But ..."
CMA: "Shut up, kid"
CMA: "Xbox and PlayStation are similar in terms of their technical specifications"
CMA: "The Nintendo Switch is a portable device that contains its own monitor, and is also significantly cheaper"
CMA: "Publishers say that developing a game for Switch is a significantly different task relative to doing it for Xbox and PS"
CMA: "Third parties noted that Nintendo makes its proposition sufficiently differentiated from other gaming ecosystems"
CMA: "The evidence we have seen suggests that Nintendo's most popular titles are targeted at a family audience"
CMA: "Switch is less substitutable to the PlayStation or Xbox"
CMA: " PlayStation and Xbox are closer substitutes"
CMA: "Nintendo is not as close as competitor to Xbox and PlayStation"
Topher
Identifies as young
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mansoor1980
Member
interesting
Edmund
is waiting for Starfield 7
From what I've read from REEE, the FTC is like a pebble MS can just kick aside easily and go ahead with the deal. And that Lina Khan is some little girl who don't know shit and will embarass herself. Is what they are saying true? I'm kinda confused now.
ToadMan
Member
Except there's no market for it on switch today but there is one on PS.
So now you get it.
ToadMan
Member
I don't think so.
You're looking for "gotchas" - most people are commenting in good faith and assuming you (and some others) can at least think for yourselves and not need every detail spelled out multiple times …
Yep. The deal as conceived a year ago is dead.
Agree or not is irrelevant - it is what it is.
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MasterCornholio
Member
What about the EC?
Haven't seen them approve the deal without any concessions. So I'm wondering what kind of concessions they want.
Bumblebeetuna
Member
Man, 40 pages since my last thread visit last week. Has anything substantial happened recently or just more back and forth bickering?
fred420170
Member
back and forth bickering, you didn't miss anything.
Daneel Elijah
Member
Microsoft will meet the EU representatives at Brussels the 21, according to Mlex : twitter link of a resetera post.
Thirty7ven
Banned
Say what you want about their output, but Microsoft offers endless entertainment, following in the footstep of Dunder Mifflin.
Microsoft: "We are in third place"
CMA: "False"
Microsoft: "Nintendo is a close competitor to Xbox"
CMA: "Do you really think we are so stupid?"
Microsoft : "Nintendo is fine without COD"
CMA: " Because is not a close competitor to Xbox and PlayStation"
Microsoft: "But ..."
CMA: "Shut up, kid"
CMA: "Xbox and PlayStation are similar in terms of their technical specifications"
CMA: "The Nintendo Switch is a portable device that contains its own monitor, and is also significantly cheaper"
CMA: "Publishers say that developing a game for Switch is a significantly different task relative to doing it for Xbox and PS"
CMA: "Third parties noted that Nintendo makes its proposition sufficiently differentiated from other gaming ecosystems"
CMA: "The evidence we have seen suggests that Nintendo's most popular titles are targeted at a family audience"
CMA: "Switch is less substitutable to the PlayStation or Xbox"
CMA: " PlayStation and Xbox are closer substitutes"
CMA: "Nintendo is not as close as competitor to Xbox and PlayStation"
Dumbass stuff, somebody tell this bloke a console is a console.
MasterCornholio
Member
To offer the 10 year deal as a concession?
I'm guessing it's something like that.
Daneel Elijah
Member
I suppose. Sony should be there too. They will have to answer the CMA this month too.
Iced Arcade
Member
I'm for the deal BUT that 10 year deal isn't all that it's cracked up to be when you take into account they were talking about stopping the annual release of COD.
That has potential shadiness
That has potential shadiness
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MasterCornholio
Member
Yeah I'm guessing whatever concerns they have need to be taken care of by concessions if they are required.
Either way this isn't going to be a free lunch for them.
SneakersSO
Member
I've signaled this a few times, but i'll explain this again: the purchasing agreement that ATVI & MS signed also has a good faith clause; *any* act done in the public view that can be construed as being anything less than showing full support for the merger itself by either party can be viewed as being in breach of this good faith clause, and thus opens up the party to litigation by the other for breaching the purchasing agreement.
You do not hire an outside financial firm to act as Activist Investor Protection, which has to be done publicly because the mere act of hiring them is a signal to your shareholders, and the sole purpose of hiring them is to protect your executive board from said shareholders. Since ATVI is the one being purchased, this isn't an act of ATVI hiring Morgan Stanley to protect them from MS shareholders, because as far as ATVI is concerned, they aren't going to even have shareholders should this deal go through.
The only reason you would do this is if you are fully anticipating that a merger deal is not going to go through. I went through an $8B M&A process in 2021 and we did not have to hire any outside financial firm for this, cause we were 100% confident (both us and the group buying my employer) that the merger was going to be approved uncontested, and we were; doing so would put us at risk of breaching our good faith clause.
As you said though, this does not mean that ATVI feels the deal is 100% dead, but the fact that they would even do this signals its far closer to dying than anything else. To put it another way - many big fiscal analysts in Wall Street have, since January 2022, put the odds of this deal going through at about 50% and even had some articles/editorials written covering why. The stock price of ATVI has traded well below the sale price of the purchasing agreement this entire time because of this lack of confidence (purchasing price is $96 per share - its traded in the $70~ price range per share this entire time). Its super unusual btw for the stock price of a company set to be bought by a bigger entity to trade this far below the sale price. And yet, it wasn't until now that ATVI went and hired a Activist Investor Protection group. Take that however you want.
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Daneel Elijah
Member
The 10 year deal basically do not exist yet from the CMA point of view. In their latest declaration they said clearly that nothing that Microsoft have said to them at this point can be considered an adequate remedial. So either they propose a great deal and have Sony approval fast to up their chances, or they go to divesture route. It is obvious that they tried to have the merger made with no limitations at all. And we will have to see were their priorities lays.
The CMA is fairly advanced in this proccess. The EU have been somewat slower. They just have a few weeks ago said their Statement of objection to Microsoft. So I consider that like the Phase one of CMA. Microsoft will if the rumor is right see them the 21 and answer their questions. The rumor has always been that the EU will pass with behavioral remedies but I can't find who said that. I can see Sony convince them like they probably did the CMA. It seems obvious that Microsoft did not predict that much resistance from the regulators. The Brexit made the CMA stronger and I suppose that Microsoft is not that experienced in mergers.
X-Wing
Member
Yeah, I mean, it's pretty logical isn't it? Why would they be so desperate for such a deal?
X-Wing
Member
They were just hoping that because of the sex scandals Activision would look less of an important asset.
RoadHazard
Gold Member
The CMA stuff keeps talking about "foreclosure" and "foreclosing SIE", but what does that term mean in this context? I know what it means in the context of home mortgages etc, but the same definition doesn't seem to apply here, or at least I don't understand how it does.
jm89
Member
They will remove it from playstation.
RoadHazard
Gold Member
Hmm
foreclosure
noun
the action of taking possession of a mortgaged property when the mortgagor fails to keep up their mortgage payments.
Or
foreclose
verb
1.
take possession of a mortgaged property when the mortgagor fails to keep up their mortgage payments.
"the bank was threatening to foreclose on his mortgage"
2.
rule out or prevent (a course of action).
"the decision effectively foreclosed any possibility of his early rehabilitation"
I still don't understand the way that term is being used here, lol.
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GHG
Gold Member
What they (the CMA and all other regulators) are referring to is called market foreclosure.
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Daneel Elijah
Member
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RoadHazard
Gold Member
Ah, yes, that makes more sense.
Market foreclosure or vertical foreclosure, is the production limitation put on a producing organisation if either it is denied access to a supplier (upstream foreclosure), or it is denied access to a downstream buyer (downstream foreclosure).[1] A supplier or intermediary in a supply chain could acquire this form of market power against competitors through means of mergers and acquisitions.
Iced Arcade
Member
lol I meant "the proposed 10 year deals"
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ReBurn
Gold Member
lol of course they have 100% success in the adjudicative court process. The administrative court judges are on the FTC payroll and the FTC decides the outcome of any appeal. So of course the FTC always sides with itself on appeal. The companies seeking M&A have to wait as long as the FTC takes to give themselves their gold star and pat on the back before being able to appeal to the federal court system and seek due process under the law.
For the companies that are willing to hold on that long, like Meta was, they get in front of the judicial branch and then the FTC losses start stacking up. The point of the FTC process is to slow down the process and make it too expensive for companies to proceed. But for companies with the cash to wait it out they can and do beat the FTC.
Whether you or anyone else feels the deal is illegitimate isn't really relevant. At the end of the day it's not really relevant how Lina Khan's FTC feels about it. In the US it comes down to whether the FTC can prove that the merger of Microsoft and Activision would result in an illegal entity. If it does then the district court should uphold the FTC's judgment based on the administrative court's findings of fact and block the acquisition. If it does not then the deal will be allowed to proceed in the US.
The CMA process has no bearing on the US legal process at all. If the FTC halts their legal process as a result of a CMA decision, which will not happen, then Microsoft will be clear to proceed in the US because in the US mergers and acquisitions do not require regulatory approval. The only way there isn't a hearing In the US is if Microsoft pulls out.
SneakersSO
Member
The CMA process does have some bearing on the FTC's case - any findings or consensus any other regulator finds can be used in the FTC's case. The FTC will not halt its case, but if the deal falls through because MS/ATVI feel the concessions being asked by the CMA are a bridge too far, then MS will simply drop their case in the US/FTC as well.
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ToadMan
Member
Yeah I got that feeling too.
I don't read Ree but some of the hand waving of the FTC is very dismissive.
The FTC didn't go for a federal court injunction to stop MS acquiring ABK. So right now, MS can legally go ahead in the US. This has been interpreted as the FTC having a weak case and not wishing to test the federal courts.
But there's no statute of limitations on this kind of ruling. The FTC will grind its way through its administrative court system and almost certainly find that MS's merger is illegal. They have a 100% record in the administrative court.
By that time, MS could have already consummated the acquisition. So then MS, having been found to have committed an illegal merger, would appeal to the federal appeal court and set up the final showdown.
In that showdown there's MS with ABK already under control vs FTC with an administrative court judgment in its favor.
At that point place your bet. History shows that federal appeals tend to go in favor of the FTC because they've already tested the case in a lower level court and the appeals court gives deference to that prior decision. Anyway, the appeals court defaults to that lower court ruling, and it's up to MS to present enough evidence to overturn it.
If MS failed this appeal, well they'd really be in the shit. Having been found to have illegally acquired ABK, they'd be open to claims from anyone and everyone from competitors to consumers to ABK and the FTC itself.
But, in practical terms, the FTC relies on the implied risk of being found to have illegally merged to get companies to voluntarily make a deal way before this stage, and that's where we are now. FTC doing it's discovery to gather evidence for this and subsequent cases.
Simultaneously the CMA is doing the job too which is why I'd say it's unlikely to ever see the inside of a US courtroom. Whatever deal MS gets past the CMA will almost certainly be ok with the FTC.
Or MS will pull out if the CMA demands make the deal untenable.
Pelta88
Member
Looks like we've gone full circle. Buffet reduces their position in Activision.
Berkshire reduces stake in Activision Blizzard, BNY Mellon
NEW YORK/BANGALORE -Warren Buffett's Berkshire Hathaway Inc reduced its stakes in Activision Blizzard and in Bank of New York Mellon in the fourth quarter, while it added shares in Apple Inc,... -February 14, 2023 at 02:40 pm EST - MarketScreener
www.marketscreener.com
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SneakersSO
Member
ToadMan
Member
Ah - yes that's what I corrected for you.
It's a long way of saying "chances are MS will lose in the administrative court".
The chances being 100% based on 25 years of history.
What? The FTC vs Meta was just to get an injunction out and it took 7 months from the FTC application.
The money isn't the problem, its the time as Meta pointed out and their's was a tiny deal by comparison.
Yea you're right. Give peace a chance and see if corporations will be reasonable… lol.
It clearly is illegitimate though
MS is clear to proceed in the US right now.
But they won't proceed because of the CMA, EU and China approvals.
The CMA has a direct bearing in practice as do those other bodies.
Whatever deal MS does to get past the CMA, will almost certainly be enough for the FTC too. If they can't get a deal to satisfy the CMA, MS will pull out.
FTC stuff is a side show for now.
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Varteras
Member
Yeah there are a lot of things we don't know about that 10-year deal, so far as I can tell. Were they required to release an annual CoD for that 10 years? Were they required to release at content and performance parity? Did that include any and all CoD titles like spin-offs or just main entries? Would they still have released on GamePass, which would put Sony in a lose/lose situation, where Xbox attracts customers away from PlayStation with "free" CoD titles that you have to pay for elsewhere or put the games on PS Plus to match and lose sales anyways? Like you are saying, the number of years hardly matters if the rest of the deal was bogus. Never mind they tried for a paltry 3-year deal to start after the contracts between Sony and Activision ran out. Which Microsoft was likely to honor, for the most part. Plus, for the same reason regulators don't like behavioral remedies, it was likely only a matter of time before Xbox tried to circumvent the deal. Any company would. It hardly matters now though since it seems the CMA isn't really interested in those kind of concessions and the FTC is out to block it entirely.
ToadMan
Member
From your link (did you read it? And understand what you read? Presumably not).
"The FTC has appealed the ALJ's ruling to the full Commission."
That is to say they are doing an appeal and the decision will be taken by the FTC commissioners themselves. And they haven't ruled against themselves for 25 years …. ever.
Do I really have to spell it out? Meh may as well.
That's a 100% record of FTC in the administrative court.
MasterCornholio
Member
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