Microsoft Says Suit Seeking to Halt Activision Acquisition is Without Merit, Premature

A motion to dismiss filed on Tuesday claims that antitrust allegations concerning the prospective acquisition of Activision Blizzard by Microsoft are unfounded. Microsoft pressed the Northern District of California court to toss the gamers’ claims on grounds that they fail to state claims for relief, they are unripe, and because the plaintiffs lack constitutional standing.

The gamers filed suit after the Federal Trade Commission, the European Commission, the U.K.’s Competition & Markets Authority, and other worldwide regulators scrutinized the deal, with regulatory reviews still underway. All voice concerns about the effects the acquisition will have on competition.

The ten gamers specified three theories of harm in their December-filed complaint, including that Microsoft and Activision Blizzard are horizontal competitors in developing, publishing, and selling video games and that the $68.7 billion buyout will lessen competition in the video game market. The motion says, however, that the complaint is short on critical details like how many competitors develop, publish, and/or distribute video games in each of these supposed “markets.”

The plaintiffs’ second theory is that Microsoft will make Activision Blizzard’s games exclusive or partially exclusive to Microsoft platforms, including its Xbox and computer operating system, Windows. Microsoft counters that it “remains open to remedies by the regulators,” including continuing to make Activision Blizzard games available on competitors’ platforms.

Lastly, the motion targets the plaintiffs’ “labor market theory,” which alleges that the proposed acquisition will reduce competition for labor between video game developers, publishers, and distributors. However, the complaint lacks a legally cognizable market or an explanation as to how the plaintiffs would be harmed by any change in that market, the defendant says.

Microsoft’s unripeness and standing arguments center on the prospective nature of the acquisition. “Plaintiffs rely on a chain of speculative inferences to allege that they will be injured, including conjecture about the transaction’s final terms and further conjecture about Microsoft’s behavior afterward (such as a baseless allegation that Microsoft will foreclose competitors’ access to Activision Blizzard video games),” the motion argues.

The motion to dismiss comes after Microsoft unsuccessfully bid to stay the case pending regulatory outcomes. It is before Judge Jacqueline Scott Corley in San Francisco, Calif.

The plaintiffs are represented by Alioto Law Firm and Joseph Saveri Law Firm LLP and Microsoft by Wilkinson Stekloff LLP and Alston & Bird LLP.