Microsoft admits it should not have argued the FTC is unconstitutional

Expand / Microsoft’s arguments against the FTC blocking its purchase of Activision Blizzard now rely more on Call of Duty than constitutional authority and corporate civil rights.

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Microsoft has amended its response to the Federal Trade Commission’s lawsuit trying to block a $69 billion acquisition of Activision Blizzard, no longer arguing that the FTC is unconstitutional in nature and denying the company its First Amendment rights. 5th.

David Cuddy, public affairs spokesman for Microsoft, told Axios’ Stephen Totilo that the company “put all possible arguments on the table internally and should have dropped those defenses before we filed. The FTC has an important mission to protect competition and consumers, and we quickly updated our response to remove language suggesting otherwise based on the Constitution,” Cuddy told Axios.

Microsoft’s original Federal Trade Commission response (PDF) stated that the proceedings against Microsoft were invalid “because of the Commission’s structure as an independent agency possessing significant executive power and the limitations associated with the removal of Commissioners and other officials of the Commission, violates Article II of the US Constitution and the separation of powers.” Another count claimed that the use of an administrative law judge, rather than a typical life judge, violated Article III.

Based on these claims, Microsoft had also alleged that the FTC’s procedures, the nature of its administrative proceedings, and the commission’s alleged “prejudice on the merits” of its case, Microsoft’s due process rights under the 5 were violated.

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Microsoft’s amended answer (PDF) removes the constitutional claims from its counterarguments. It stands by the software giant’s broader claims that the Activision acquisition would not shut down game subscription services or cloud gaming services, that it has made offers to license games like Call of Duty to Nintendo, Valve and other platforms. others, and that the FTC’s claims are “highly speculative” and not actionable.

Activision, which made identical arguments about its constitutional rights under the FTC investigation and proceedings in its initial response, will also drop that aspect, according to Axios.

Popular and timely arguments

The companies’ opposition to the regulatory authority comes as the US Supreme Court considers cases that could give companies more power to pursue constitutional protections against regulatory agencies. Axon Enterprise v. Federal Trade Commission involves a body camera company that had its acquisition of a competitor investigated by the FTC. Axon filed an injunction and argued that the FTC and its adjudication process were unconstitutional, arguments partially echoed in Microsoft’s original response.

Microsoft, a company deeply familiar with the FTC’s intent and procedures, has sought more broadly to position itself as a weak deterrent in certain gaming markets rather than an anticompetitive force. In the Wall Street Journal, Microsoft Vice President and President Brad Smith described his company as the third largest in the console market, a barely significant player in mobile gaming and simply the first major company to innovate around monthly gaming subscriptions.

Microsoft and Activision Blizzard face numerous other claims of unfair practices. Call of Duty players sued Microsoft in late December, claiming its acquisition would allow it to “lock in rivals, limit production, reduce consumer choice, raise prices and further hinder competition.” The European Commission is investigating the deal and the UK’s Competition and Markets Authority has opened a “Phase 2” investigation.