Does the FTC violate the Constitution in its Activision merger complaint? Microsoft thinks so

December 28, 2022

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The interesting thing about Microsoft continuously fighting for the $69 billion Activision megadeal is how it is trying to be both a “nice guy” and a fighter at the same time. After offering tons of concessions to concerned parties and repeatedly announcing assurances, it is now facing the FTC like a killer by trashing its overly “speculative” claims in its complaint, adding it violated the Constitution.

Microsoft’s comeback to the agency’s complaint against it is just direct and on point. The 37-page document tackles different concerns tapped by the FTC, including Microsoft’s alleged ZeniMax commitment to the European Commission (that the regulator denied) and the current enormous market share of Sony’s PlayStation versus Xbox.

Of all the topics touched, however, the parts that stand out are Microsoft’s direct statements that FTC failed to provide facts to support and allege its different concerns. The software giant also directly stated that the complaint filed by the agency “reflects improper selective enforcement of the antitrust laws.” The Articles II and III of the US Constitution and the separation of powers were also cited by Microsoft, saying they are violated by 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” and “adjudication of the Commission’s Complaint by the ALJ and the Commission.”

The company added that the commission violated Microsoft’s right to Equal Protection under the Fifth Amendment and procedural due process under the Due Process Clause of the Fifth Amendment. Separately, Microsft stated that its Fifth Amendment Due Process right to adjudication before a neutral arbiter had been violated as well and added that “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.”

Microsoft’s response, in general, proves how fierce it could be in terms of legal battles despite trying to build the new nice guy image in addressing antitrust concerns. This approach is entirely different from the past, thanks to the leadership of Microsoft President Brad Smith and CEO Satya Nadella. This led to more peaceful actions from the company in handling competition, like the surprising remedies just to appease concerns regarding the Activision merger. Nonetheless, the FTC seems very determined to block the deal that resulted in the complaint, which was called “nutty” by a former antitrust expert due to the lack of sufficient evidence. And now that Microsoft wrecked the complaint with its solid responses, the agency’s stance probably got a deeper puncture, diminishing its chance to win the case.

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