NO. 23-15992

IN THE UNITED STATES COURT OF APPEALS 

FOR THE NINTH CIRCUIT 

––––––––––––––––––––––––––––––––––––––––––––– 

FEDERAL TRADE COMMISSION, 

Plaintiff-Appellant, 

v. 

MICROSOFT CORP., and 

ACTIVISION BLIZZARD, INC., 

Defendants-Appellees. 

––––––––––––––––––––––––––––––––––––––––––––– 

On Appeal from the United States District Court 

for the Northern District of California 

No. 3:23-cv-2880 

(Hon. Jacqueline Scott Corley, U.S. Distr. J.) 

––––––––––––––––––––––––––––––––––––––––––––– 

REPLY BRIEF 

OF THE FEDERAL TRADE COMMISSION 

[REDACTED] 

––––––––––––––––––––––––––––––––––––––––––––– 

HENRY LIU ANISHA S. DASGUPTA

Director General Counsel 

JOHN NEWMAN MARIEL GOETZ

Deputy Director Acting Director of Litigation 

SHAOUL SUSSMAN IMAD D. ABYAD

Associate Director for Litigation MARK S. HEGEDUS

JAMES H. WEINGARTEN Attorneys 

PEGGY BAYER FEMENELLA F T J A EDERAL RADE COMMISSION AMES BELL Office of the General Counsel CEM AKLEMAN 600 Pennsylvania Avenue, NW MEREDITH R. LEVERT Washington, DC 20580 JENNIFER FLEURY (202) 326-2115 Attorneys mhegedus@ftc.gov 

BUREAU OF COMPETITION

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i 

TABLE OF CONTENTS

Introduction...............................................................................................1

Argument...................................................................................................3

I. The FTC Raised Serious Questions About The Merger’s 

Harm to Competition. .........................................................................3

A. The District Court Misapplied Section 13(b) of the 

FTC Act By Requiring the FTC to Prove the 

Ultimate Merits in a Preliminary Proceeding. ...........................5

B. Placing Activision Content Exclusively on Game 

Pass is Neither Procompetitive nor an Efficiency ....................17

C. Appellees Fail to Defend the District Court’s 

Mishandling of Their Proposed Remedies ................................20

1. The District Court Erred As a Matter of Law 

and Logic in Considering Appellees’ Proposed 

Remedies at the Preliminary Injunction Stage..................20

2. In Any Event, Appellees Have Not Shown That 

Their Proposed Remedies Are Adequate............................25

II. The District Court Erred in its Treatment of Partial 

Foreclosure and the Brown Shoe Liability Framework...................27

A. The FTC Consistently Demonstrated that the 

Merger is Likely to Lead to Harmful Partial 

Foreclosure.................................................................................27

B. The FTC Convincingly Showed that the Merger May 

Harm Competition Under the Brown Shoe

Framework .................................................................................29

III. The Equities Strongly Favor a Preliminary Injunction...................32

Conclusion ...............................................................................................37

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TABLE OF AUTHORITIES

CASES

Brown Shoe Co. v. U.S., 

370 U.S. 294 (1962).................................................................. 17, 30, 31

Cal. v. Am. Stores Co., 

495 U.S. 271 (1990)..............................................................................24

FTC v. Arch Coal, Inc., 

329 F. Supp. 2d 109 (D.D.C. 2004) ......................................................23

FTC v. Arch Coal, Inc., Memorandum Opinion,

No. 1:04-cv-00534 (ECF_67) (D.D.C. 2004).........................................24

FTC v. Dean Foods Co., 

384 U.S. 597 (1966)..............................................................................32

FTC v. Elders Grain, Inc., 

868 F.2d 901 (7th Cir. 1989).................................................................. 7 

FTC v. Exxon Corp., 

636 F.2d 1336 (D.C. Cir. 1980) .............................................................. 7 

FTC v. H.J. Heinz, 

246 F.3d 708 (D.C. Cir. 2001) ...................................................... passim

FTC v. Libbey, Inc., 

211 F. Supp. 2d 34 (D.D.C. 2002) ............................................ 23, 24, 25

FTC v. Penn State Hershey Med. Ctr., 

838 F.3d 327 (3d Cir. 2016) ................................................... 5, 7, 21, 29

FTC v. Procter & Gamble Co., 

386 U.S. 568 (1967)..............................................................................32

FTC v. RAG-Stiftung, 

436 F. Supp. 3d 278 (D.D.C. 2020) ......................................................23

FTC v. Sysco Corp., 

113 F. Supp. 3d 1 (D.D.C. 2015)....................................................23, 25

FTC v. Warner Commc’ns Inc., 

742 F.2d 1156 (9th Cir. 1984)...................................................... passim 

FTC v. Whole Foods Mkt. Inc., 

548 F.3d 1028 (D.C. Cir. 2008) .................................................. 7, 21, 32

ii

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FTC. v. Beatrice Foods Co., 

587 F.2d 1225 (D.C. Cir. 1978) .............................................................. 5 

Hosp. Corp. of Am. v. FTC, 

807 F.2d 1381 (7th Cir. 1986)..............................................................21

Medical Society v. Toia, 

560 F.2d 535 (2d Cir. 1977) ................................................................... 7 

Saint Alphonsus Med. Ctr.-Nampa Inc. v. St. 

Luke’s Health Sys., Ltd., 

778 F.3d 775 (9th Cir. 2015).............................................. 14, 19, 23, 26

Steves & Sons v. JELD-WEN, Inc., 

988 F.3d 690 (4th Cir. 2021)................................................................24

United States v. E.I. du Pont de Nemours & Co., 

366 U.S. 316 (1961)........................................................................23, 25

United States v. Greater Buffalo Press, Inc., 

402 U.S. 549 (1971)..............................................................................21

STATUTES

15 U.S.C. § 18 ...................................................................................... 4, 20

15 U.S.C. § 53(b).................................................................................... 4, 5

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INTRODUCTION

Microsoft, a dominant firm in multiple gaming markets, seeks to 

acquire the games and creative assets of Activision, a leading

independent game developer. The $69 billion acquisition would 

restructure the industry and will likely give Microsoft the ability and 

incentive to deny, delay, degrade, or otherwise foreclose rivals from 

accessing Activision’s games, limit new entry and expansion, reduce 

consumer choice, and stymie innovation: in other words, to harm 

competition. If Microsoft is given free rein to weaponize Activision’s 

content, emerging markets for content library subscriptions and cloud 

gaming will be walled off and dominated by just a few large 

companies—rather than flourishing as open, competitive landscapes 

with platform-agnostic content, new platforms emerging to challenge 

established incumbents, and consumers free to choose where and how to 

access their games.

The district court acknowledged that the preliminary injunction 

record contained conflicting evidence on the anticompetitive effects of 

the merger, but it nonetheless declined to temporarily pause the deal to 

allow the Federal Trade Commission (FTC or Commission) to determine 

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whether the merger may substantially lessen competition. As the FTC’s 

opening brief explained, the court erred as a matter of law in denying 

preliminary relief under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b). 

The FTC raised serious questions about the merger’s competitive effects 

that the Commission should have been permitted to resolve after a full 

merits hearing. Instead, the court usurped the Commission’s statutory 

role and endeavored to decide the antitrust merits itself; contrary to 

Appellees’ arguments, this was reversible error. 

The court likewise determined that the merging parties’ proposed 

remedies were sufficient to address the merger’s harm to competition, 

even though the court had before it only a preliminary evidentiary 

record and the extent of the harm had not yet been determined. In

defending the district court’s decision, Appellees Microsoft and 

Activision characterize the proposed remedies—post-complaint side 

deals with third parties—as the “factual reality” of the post-merger 

world. Important elements of that reality, however, are unknown and

shifting. And in any event, whether the side deals adequately remedy 

likely harms to competition should be considered in the administrative 

proceeding where the harms will be thoroughly evaluated, not in a 

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preliminary 13(b) action with a limited scope. This Court should reverse 

and order a preliminary injunction to ensure the Commission has a full 

and fair opportunity to consider the merger—and its impact on the 

future of gaming—in an administrative proceeding.

ARGUMENT

I. THE FTC RAISED SERIOUS QUESTIONS ABOUT THE 

MERGER’S HARM TO COMPETITION. 

The FTC made a legally sufficient showing below that Microsoft’s 

proposed acquisition of Activision will likely provide Microsoft with the 

ability and incentive to foreclose its gaming platform rivals from 

competitive access to a leading input provider—resulting in reasonably 

probable harm to competition in the markets for content subscriptions, 

cloud gaming services, and consoles.1 Microsoft recognized that markets 

like these represent the probable future of gaming, see 6/28/23 Hr’g Tr. 

Nadella (Microsoft) 839:3-840:1, 841:23:-842:3 [1-SER-215-216], which 

1 Although Appellees criticize the FTC for waiting to file a 13(b) action 

while other enforcers’ reviews were ongoing, M/A Br. 17, Microsoft 

previously argued that challenges to the merger were unripe while the 

merger was “undergoing review by the U.K., European, and other 

worldwide regulators.” Defendant Microsoft Corporation’s Reply in 

Support of Motion to Dismiss, DeMartini, et al. v. Microsoft Corp., No. 

3:22-cv-08991-JSC, ECF_62 at 14 (N.D. Cal. Feb. 24, 2023). Microsoft 

cannot have it both ways.

3 

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increases incentives, post-merger, to withhold Activision content from 

rivals that otherwise would be available. Contrary to Appellees’ 

assertions (M/A Br. 37), the FTC has consistently advanced arguments 

about all three markets from its first pleadings through its last,2 as well 

as throughout trial.3 

The district court’s denial of a preliminary injunction rested on an 

application of the wrong legal standard. To obtain preliminary relief, 

the FTC needed to show serious questions going to the merits of its 

Clayton Act Section 7 claim that the acquisition may substantially 

lessen competition in any line of commerce. 15 U.S.C. §§ 18, 53(b); FTC 

v. Warner Commc’ns Inc., 742 F.2d 1156, 1162 (9th Cir. 1984). The FTC 

made that showing and Appellees have not demonstrated otherwise. 

2 See, e.g., ECF_1 at 18-22 [2-FER-77-81]; ECF_7 at 13-16 [2-FER-67-

70]; ECF_309 at 69-82 [2-FER-5-18]. 

3 See, e.g., 6/28/23 Hr’g Tr. Nadella (Microsoft) 833:22-848:11 [1-SER214-217]; 6/23/23 Hr’g Tr. Spencer (Microsoft) 269:19-22, 305:25-308:20, 

393:11-398:23, 465:13-466:5 [1-SER-72, 1-SER-81-82, 1-SER-103-104, 1-

SER-121]; 6/28/23 Hr’g Tr. Kotick (Activision) 733:2-734:5, 753:10-758:1 

[1-SER-189, 1-SER-194-195].

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A. The District Court Misapplied Section 13(b) of 

the FTC Act By Requiring the FTC to Prove the 

Ultimate Merits in a Preliminary Proceeding. 

Under Section 13(b) of the FTC Act, the FTC may obtain a 

preliminary injunction if it shows a likelihood of success on the ultimate 

merits to be decided in the administrative proceeding, and that the 

equities favor relief. 15 U.S.C. § 53(b); Warner Commc’ns, 742 F.2d at 

1159. The FTC satisfies the likelihood of success standard if it “raises 

questions going to the merits so serious, substantial, difficult and 

doubtful as to make them fair ground for thorough investigation, study, 

deliberation and determination by the FTC in the first instance.” 

Warner Commc’ns, 742 F.2d at 1162 (quoting FTC. v. Beatrice Foods 

Co., 587 F.2d 1225, 1229 (D.C. Cir. 1978)). 

At the preliminary injunction stage, “‘[t]he FTC is not required to 

establish that the proposed merger would in fact violate section 7 of the 

Clayton Act.’”4 FTC v. Penn State Hershey Med. Ctr., 838 F.3d 327, 337 

4 Appellees are simply wrong in asserting otherwise. See M/A Br. 56.

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(3d Cir. 2016) (cleaned up).5 That is for the Commission proceeding.6

Moreover, when “presented with conflicting evidence” on a “merger’s 

probable effect on competition,” the district court in a 13(b) case should 

not “make a final determination,” but should undertake “only a 

preliminary assessment” of the merits. Warner Commc’ns, 742 F.2d at 

1162.7 Put another way, the court should not “resolve the conflicts in 

the evidence, compare . . . effects on competition in other cases, or 

undertake an extensive analysis of antitrust issues.” Warner Commc’ns, 

742 F.2d at 1164. 

5 Appellees are mistaken in arguing that this standard is contrary to a 

prior FTC statement to Congress that Section 13(b) requires the FTC 

“to make a robust evidentiary and legal showing that the transaction 

would likely be anticompetitive in order to obtain a preliminary 

injunction.” M/A Br.36 (quoting Prepared Statement of the FTC Before 

the U.S. Sen. Comm. On the Judiciary 14 (Oct. 7, 2015)). There is no 

inconsistency. Here, for example, the many pages of testimony and 

documents in the record below demonstrate that the FTC made a robust 

evidentiary showing. 

6 The Commission has returned the merits case to adjudication, 

having “determined that the public interest warrants that this matter 

be resolved fully and expeditiously.” See https://www.ftc.gov/system/files 

/ftc gov/pdf/608644.2023.09.25-d09412-order-returning-matter-toadjudication.pdf. 

7 Thus, Appellees are incorrect in claiming that precedent does not

“circumscribe[] a district court’s review of the evidence” at this stage. 

See M/A Br. 36.

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Contrary to Appellees’ contention, a Section 13(b) preliminary 

injunction is not “‘an extraordinary and drastic remedy,’” M/A Br. 32 

(quoting FTC v. Exxon Corp., 636 F.2d 1336, 1343 (D.C. Cir. 1980)

(cleaned up)).8 Rather, “13(b) places a lighter burden on the 

Commission than that imposed on private litigants by the traditional

equity standard.” Warner Commc’ns, 742 F.2d at 1159. A 13(b) 

preliminary injunction is “meant to be readily available to preserve the 

status quo while the FTC develops its ultimate case.” FTC v. Whole 

Foods Mkt. Inc., 548 F.3d 1028, 1036 (D.C. Cir. 2008) (Tatel, J., 

concurring). To that end, “any ‘doubts are to be resolved against the 

transaction.’” Penn State Hershey, 838 F.3d at 337 (quoting FTC v. 

Elders Grain, Inc., 868 F.2d 901, 906 (7th Cir. 1989)). 

Appellees miss the mark in insisting that the district court 

correctly considered cases addressing permanent relief under Section 7 

8 Exxon itself explained that Congress intended “injunctive relief be 

broadly available to the FTC by incorporating a unique ‘public interest’ 

standard in [Section13(b)], rather than the more stringent, traditional 

‘equity’ standard.” 636 F.2d at 1343; accord Whole Foods, 548 F.3d at 

1042 (Tatel, J., concurring). Appellees rely on a passage of Exxon that 

quotes Medical Society v. Toia, 560 F.2d 535, 538 (2d Cir. 1977), a case 

applying the traditional preliminary injunction standard, not the 

Section 13(b) standard. 

7 

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of the Clayton Act, M/A Br. 34-35. As the FTC’s opening brief explained, 

Section 7 supplies the applicable antitrust framework for evaluating 

whether the FTC has raised a serious merits question, see FTC Br. 23-

24, but the district court erred by holding certain of the FTC’s showings 

to the burden of proof that would apply in the ultimate merits case, see 

id. at 25-27. 

The district court’s overstepping is particularly evident in its 

handling of Appellees’ proposed remedies. The court acknowledged that 

it lacked a developed factual record on whether Appellees’ postcomplaint side agreements were sufficient to address the acquisition’s 

anticompetitive effects. 6/29/23 Hr’g Tr. 1134:13-23; 1150:16-1151:13 [1-

SER-290, 1-SER-294]. Nonetheless, it proceeded to decide that the side 

agreements addressed the FTC’s concerns. Op. 52 [1-ER-53].9 That 

ruling was legal error in a 13(b) action, when the record was both 

9 Appellees misread the record in claiming the FTC said the Sony 

agreement “would address its concerns in the console market.” M/A Br. 

44 (citing 1-SER-207). FTC counsel said no such thing, instead stating

that the FTC would “need to evaluate that agreement” [1-SER-270].

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incomplete and contested.10 The Commission should have been given 

the opportunity to rule on the merits based on a fully developed 

record.11 

Besides making improper merits rulings on a preliminary record, 

the district court erroneously undertook to resolve evidentiary conflicts

in that record, contrary to Warner Communications. On product market 

definition, the court correctly recognized that, against a backdrop of 

conflicting evidence, the FTC had made a “tenable showing” that high 

performance consoles constitute a relevant market, Op. 27 [1-ER-28]

(quoting Warner Commc’ns, 742 F.2d at 1164). In contrast, after finding 

10 See ECF_175 at 88-93, 118-119 [2-FER-46-51, 2-FER-60-61]; 

ECF_309 at 152-155, 190-193 [2-FER-21-24, 2-FER-34-37]; 6/29/23 Hr’g 

Tr. 1134:13-23; 1150:16-1151:13 [1-SER-290, 1-SER-294].

11 The proceedings below were expedited following Appellees‘ 

representation that Microsoft faced a July 18, 2023, deadline to close 

the merger; Appellees further told the court that a preliminary 

injunction would “kill the deal.” ECF_108 at 24 [2-FER-65]. But after

prevailing in the district court and after this Court denied an injunction 

pending appeal, Microsoft and Activision agreed to extend their 

contractual closing date by three months. And an interim injunction 

entered by the U.K. Competition & Markets Authority did not end the 

deal. Rather, the parties renewed their engagement with the U.K. 

regulator to try to address its concerns, including through an agreement 

affecting the cloud market that post-dated the preliminary injunction 

hearing and was not considered by the district court.

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“conflicting evidence” on anticompetitive effects, Op. 52 [1-ER-53], the 

court ignored Warner Communications and proceeded to resolve key 

evidentiary conflicts. The FTC is not merely disputing factual findings, 

see M/A Br. 45-46. Rather, it seeks reversal based on legal error that 

infected the district court’s entire decision.

For example, the FTC raised a serious question whether, absent 

the merger, an independent Activision would make its content available 

through subscription or cloud-gaming services. Citing the district 

court’s decision, Appellees maintain that Activision would not do so due 

to cannibalization and game-performance concerns. M/A Br. 38-39. But 

Activision previously offered its content on subscription services and 

admitted it would consider offering its titles on subscription and cloudgaming services under acceptable commercial terms. PX7006 (Kotick 

(Activision) IH) at 202:9-203:4 [2-FER-115-116] (Activision CEO, 

identifying “roughly as an acceptable figure); 6/28/23 Hr’g 

Tr. Kotick (Activision) 748:9-16, 749:4-19, 755:18-22 [1-SER-192-194]; 

PX2396 (Activision) at 001 [2-FER-121]; PX2406 (Activision) at 001 [2-

FER-117]; PX2138 (Activision) at 001 [2-FER-127]. Moreover, at the 

time of the merger announcement, 

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6/28/23 Hr’g Tr. Kotick (Activision) 755:1-22 [1-SER-194]; PX8000 

(Eisler (Nvidia) Decl.) ¶¶ 43, 44 [3-ER-321-322]; see also FTC Br. 31-34. 

The district court failed to grapple with this evidence and 

erroneously resolved conflicts about Activision’s plans as an 

independent company in Appellees’ favor. As the D.C. Circuit has held,

it is error to uncritically accept a merging party’s argument that, absent 

the merger, “no amount of money” could achieve a purported benefit of 

the deal. FTC v. H.J. Heinz, 246 F.3d 708, 722 (D.C. Cir. 2001). So too 

here. The district court failed to recognize that the FTC’s evidence 

raised at least a serious question as to whether, but for the merger,

Activision would make content available on cloud-gaming services. 

The court also erroneously resolved conflicting evidence about 

Microsoft’s conduct with past acquisitions and whether that predicted 

what Microsoft would do with Activision titles after the merger. See 

Warner Commc’ns, 742 F.2d at 1162-64. At issue were Microsoft’s 

acquisition of two game developers, Mojang, the developer of Minecraft, 

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and ZeniMax, the developer of several leading games. The court found 

that Microsoft's keeping Minecraft on multiple platforms and not 

making it exclusive to Xbox predicted that Microsoft would not use Call 

of Duty to foreclose, while Microsoft's decision 

ZeniMax titles exclusive-thereby foreclosing rivals from that contentwas not predictive. Op. 37-38, 44, 51 [1-ER-38-39, 1-ER-45, 1-ER-52]; 

PX4309 (Microsoft) at 001 [3-ER-393] games will 

be Xbox exclusive); see also FTC Br. 67-68. 

What the court should have focused on was that Microsoft's 

conduct with ZeniMax, which occurred less than two years before this 

deal, raises at least a serious question as to whether Microsoft will 

foreclose rivals from Activision content after this merger. Like 

Activision's games, ZeniMax's titles represented the blockbuster content 

that platforms employ to attract users and gain a competitive 

advantage over rivals, and ZeniMax titles were largely multiplatform. 

6/22/23 Hr'g Tr. (Hines) at 90:12-21, 91:2-13 [1-SER-27]. Moreover, 

during the ZeniMax merger review, Microsoft told antitrust enforcers 

that it had no plan or incentive to foreclose ZeniMax content from 

rivals. PX0070 RFA 9 [3-ER-459]. After that deal closed, however, 

12 
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Microsoft decided titles exclusive. See 

PX4309 (Microsoft) at 001 [3-ER-393]. As one ZeniMax executive noted, 

there is no reason why Microsoft will treat Activision titles differently 

from those of ZeniMax. 6/22/23 Hr'g Tr. (Hines) at 101:7-102:3 [1-SER30]. The district court did not mention-much less grapple with-this 

key evidence. 

A third example of the district court's error is its treatment of 

competing models predicting Microsoft's incentives to engage in 

foreclosure. The court misunderstood Professor Lee's model when it 

stated that he "simply assumed a [conversion] rate" from other consoles 

to XBox "that would make exclusivity profitable." Op. 45 [1-ER-46]. 

Appellees similarly misunderstand the model in asserting that 

Professor Lee substituted "assumptions for evidence" and proffered an 

economic model that did not hold up at trial MIA Br.49. 

To measure when foreclosure would be profitable, Professor Lee 

analyzed a range of possible conversion rates, chose a baseline scenario 

from the range, and tested the reasonableness of the baseline scenario's 

13 
14

inputs against econometric and documentary evidence.12 See PX5000 

(Opening Report) at ¶¶ 445–446, 567, 573 [2-FER-93, 2-FER-95, 2-FER97]; PX5001 (Reply Report) ¶¶ 208-212 [2-FER-83-85]. Based on this 

review, he concluded that a baseline 20% conversion rate (which 

corresponds to a 5.5% share shift) was not just reasonable but likely 

conservative. PX5000 (Opening Report) at ¶572-3 [2-FER-96-97]. His 

analysis also showed that at even a 17.5% conversion rate, Microsoft 

would turn a profit notwithstanding any losses from lost Activision 

profits. PX5000 (Opening Report) at ¶ 573, Figure 49 [2-FER-97]. The 

district court plainly misunderstood this analysis. Op. 41 [3-SER-366] 

(erroneously concluding recoupment is “not...profitable”).

In any event, in addition to Professor Lee’s analyses, the FTC 

produced cognizable evidence of likely foreclosure from Microsoft’s own 

documents, including deal plan evaluation models, and Microsoft 

executives’ testimony about the models. See Saint Alphonsus Med. Ctr.-

12 The court faulted Professor Lee for using an internal Microsoft 

memorandum without verifying whether Microsoft had support for the 

figures it used. Op. 41-42 & n.6 [1-ER-42-43]. But that was not required

where the FTC needed only to raise “serious questions” on the merits 

and where the purported fault lies in Microsoft’s own course-of-business 

documents.

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Nampa Inc. v. St. Luke’s Health Sys., Ltd., 778 F.3d 775, 788 (9th Cir. 

2015) (relying in part on parties’ prior “statements and [] actions” as 

evidence of anticompetitive effects). Appellees thus misdescribe the 

record in contending that Professor Lee’s expert report and testimony 

was the “lynchpin” of the FTC’s showing on foreclosure, M/A Br. 48-49. 

The district court based its conclusion that Microsoft had no 

incentive to foreclose on a “deal plan evaluation model presented to the 

Microsoft Board of Directors to justify the Activision purchase price.” 

Op. 34-35 [1-ER-35-36]. That model showed Activision titles continuing 

to be available on other platforms and no anticipated increase in 

Microsoft’s share of the console market, but it was not the whole 

picture. 

As the evidence showed, Microsoft’s usual practice in modeling the 

financial effects of acquisitions was to assume so 

that if an independent publisher like Activision

. 6/22/23 Hr’g Tr. (Lawver) at 

234:19-235:1 [2-FER-39-40]. Consistent with that practice, Microsoft’s 

deal plan valuation model for ZeniMax similarly assumed 

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 6/22/23 Hr’g Tr. 

(Lawver) at 235:9-16 [2-FER-40]. But as discussed above, 

notwithstanding the model, Microsoft took ZeniMax titles exclusive 

shortly after it closed the transaction. 

Moreover, the district court ignored another component of the 

same Board of Directors presentation that undercut its conclusion. That 

part of the presentation identified, as a “strategic benefit” of the merger,

shifting gamers from PlayStation to Xbox consoles, resulting in

increased sales of Xbox consoles. PX4341 at 024 [2-FER-118]; 6/29/23 

Hr’g Tr. 999:1-13 [1-SER-256]. But if Microsoft maintained full and 

equal access to Activision content, there would be no reason for the

acquisition to cause gamers to shift from rival consoles to Xbox. PX5000 

(Lee’s Report) ¶ 378 [2-FER-90] (citing PX7031, Greenberg Depo. Tr. at 

75:24-76:22 [2-FER-104]); see also PX1070 at 002 [2-FER-125]. The 

strategic benefits described in the Board presentation thus support a 

finding of incentive to foreclose. Yet the court failed to address this 

evidence at all, instead finding no such incentive. 

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B. Placing Activision Content Exclusively on Game 

Pass is Neither Procompetitive nor an Efficiency

As the FTC’s opening brief explained (at 32, 44-45), Microsoft’s 

gaining control of Activision likely would extinguish any probability

that Activision titles will be offered on subscription services other than 

Microsoft’s already dominant subscription service, Game Pass. 

Referencing the relevant evidence, the court “accept[ed] for preliminary 

injunction purposes it is likely Call of Duty will be offered exclusively on 

Game Pass, and not on rival subscription services.” Op. 47 [1-ER-48]. 

The court wrongly considered that offering procompetitive, id., but

excluding all rivals is quintessential foreclosure and a competitive 

harm. The primary competitive threat posed by vertical mergers like 

this one is that they may “foreclose[] the competitors of either party 

from a segment of the market otherwise open to them.” Brown Shoe Co. 

v. U.S., 370 U.S. 294, 324 (1962) (cleaned up). Evidence that a dominant 

acquirer will withhold a substantial source of supply from all rivals, 

actual and potential, is sufficient to find a violation even in a full merits 

proceeding, e.g., Brown Shoe, 370 U.S. at 328, let alone at this 

preliminary stage. 

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18

Appellees’ claim that offering Activision content exclusively on 

Game Pass is output expanding and therefore a procompetitive

efficiency rests on their assertion that, absent the merger, no gaming 

platform subscription service would offer Activision content. M/A Br. 

41-42; see also id. at 38. As discussed herein (supra pp. 10-11), the FTC 

has raised serious questions about that key issue, which the 

Commission should determine. Warner Commc’ns, 742 F.2d at 1162. 

The FTC presented significant evidence that Activision would remain 

independent and platform-agnostic absent the merger—meaning that 

other subscription services would have a greater chance of entering and 

gaining the scale necessary to compete meaningfully against Microsoft’s 

Game Pass. See FTC Br. 32. Eliminating those opportunities for access 

and entry would substantially lessen competition for years to come. See 

FTC Br. 31-32.13 

In any event, making Game Pass a more “valuable draw for 

potential new subscribers” to Game Pass (Independent Game 

Publishers and Developers Amicus Br. at 10) is not enough. To be 

13 The evidentiary showing summarized in the FTC’s opening brief 

illustrates these harms, which Appellees ignore in contending that 

there no such evidence. M/A Br. 43.

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procompetitive, efficiencies must “create a more efficient combined 

entity and thus increase competition,” not simply provide “better 

service” to Appellees’ customers or “improve[] operations.” Saint 

Alphonsus, 778 F.3d at 790, 792 (“[T]he language of the Clayton Act 

must be the linchpin of any efficiencies defense,” thus the proposed 

efficiency must “increase competition.” (emphasis added)).14 

In disputing that Game Pass is already dominant, M/A Br. 43, 

Appellees misleadingly reference figures from outside of the content 

library subscription market where Game Pass competes. Compare 

PX8001 (Ryan (Sony) Decl.) ¶9 [3-ER-294-295] with PX0003 at 18 [3-

ER-468]. Comparing library subscription figures, Xbox Game Pass had 

over 25 million subscribers in early 2022, compared to

PS Plus Extra and Premium subscribers. PX8001 (Ryan 

(Sony) Decl.) ¶ 9 [3-ER-297-298]; PX9003 at 003 [1-FER-2]; PX1516 

(Microsoft) at 039 [3-ER-443]. In short, Microsoft is already more than 

its next-nearest rival in a nascent and highly 

14 Tellingly, Appellees’ brief omits any reference to Saint Alphonsus. 

19

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concentrated market where scale and the ability to attract a critical 

mass of gamers are especially important for competitive success.15

C. Appellees Fail to Defend the District Court’s 

Mishandling of Their Proposed Remedies

1. The District Court Erred As a Matter of Law 

and Logic in Considering Appellees’ 

Proposed Remedies at the Preliminary 

Injunction Stage

The FTC’s opening brief (at 48-52) demonstrated that binding 

precedent required the district court to leave “questions going to the 

merits” of the antitrust claims for “determination by the FTC in the 

first instance.” Warner Commc’ns, 742 F.2d at 1162. As a matter of both 

law and logic, purported remedies should be considered only at the 

merits stage of the antitrust analysis, when the full scope of 

anticompetitive harm can be determined. Appellees erroneously claim 

that the district court was merely following precedent when it relied on 

Microsoft’s side deals to deny preliminary relief. M/A Br. 56-59. In fact, 

no precedent permits the district court, in a Section 13(b) preliminary 

15 Appellees’ contention that the FTC did not raise monopoly concerns 

below is baseless. M/A Br. 43. The FTC has alleged that the merger 

violates Section 7, which condemns mergers “the effect of [which] may 

be substantially to lessen competition, or to tend to create a monopoly. 

15 U.S.C. § 18 (emphasis added). 

20

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injunction proceeding, to deny otherwise warranted relief on the ground 

that the merging parties’ proposed remedies would negate the merger’s 

competitive harm. Even at the merits stage, the Commission is “not 

required to take account of a post-acquisition transaction that may have 

been made to improve [a] litigating position.” Hosp. Corp. of Am. v. 

FTC, 807 F.2d 1381, 1384 (7th Cir. 1986) (Posner, J.).

As a matter of simple logic, Appellees fail to explain how a court 

can determine that a proposed remedy is sufficient to negate a merger’s 

anticompetitive effects when those effects have yet to be ascertained or 

quantified.16 Preliminary relief under Section 13(b) is warranted if 

serious questions are raised about a merger’s anticompetitive impact, 

but determination of the exact nature, scope, and magnitude of the 

impact is left to the merits proceedings. Warner Commc’ns, 742 F. 2d at

1162; Penn State Hershey, 838 F.3d at 352; Whole Foods, 548 F.3d at 

1042 (Tatel, J., concurring). Absent full adjudication on the merits, 

competitive harm simply cannot be ascertained, let alone putatively 

remedied. Until the Commission is able to evaluate the merger’s 

16 United States v. Greater Buffalo Press, Inc., 402 U.S. 549, 556 

(1971), and Whole Foods, 548 F.3d at 1033-34, rely on this logic: 

consideration of remedy follows the finding of liability.

21

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potential impact on cloud gaming, for example, it is difficult to 

determine whether Microsoft’s self-interested offers and deals alleviate 

those concerns. 

The district court’s approach also defied binding precedent. See

FTC Br. 48-50. The only appellate decisions the district court referenced

and that Appellees cite are inapposite. See Op. 39 [1-ER-40]; M/A Br. 

57-58. Both United States v. E.I. du Pont de Nemours & Co., 366 U.S. 

316 (1961), and United States v. AT&T, Inc., 916 F.3d 1029 (D.C. Cir. 

2019), were merits adjudications of the challenged mergers, where 

consideration of proposed remedies was appropriate because the harms 

from those mergers had already been determined in full.17 That is not 

the case here, where the entire purpose of the preliminary injunction 

proceeding below was to allow full consideration on merits to take place

later and in another forum.18

17 The district court recognized this aspect of du Pont but inexplicably 

concluded the FTC still needed to address the agreements in its prima 

facie case. Op. 39 [1-ER-40]. The court cited AT&T as support, id., but 

as discussed, AT&T was a full merits adjudication, not a 13(b) action.

18 Likewise inapposite is United States v. UnitedHealth Grp., Inc., 630 

F. Supp. 3d 118 (D.D.C. 2022), which did not involve 13(b).

22

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The other decisions that Appellees cite are non-binding district 

court rulings that are also distinguishable from this case. See FTC v. 

RAG-Stiftung, 436 F. Supp. 3d 278, 304-08 (D.D.C. 2020); FTC v. Sysco 

Corp., 113 F. Supp. 3d 1, 72-78 (D.D.C. 2015); FTC v. Arch Coal, Inc., 

329 F. Supp. 2d 109, 114 (D.D.C. 2004); FTC v. Libbey, Inc. , 211 F. 

Supp. 2d 34, 55 (D.D.C. 2002). First, all of those cases dealt with the 

structural remedy of asset divestiture, not with behavioral remedies 

like the terminable and changeable contracts that Microsoft claims will 

limit its ability to engage in foreclosure. 19 Putting aside the impropriety 

of considering remedial measures at the preliminary relief stage, the 

sufficiency of a structural remedy like divestiture is much easier to 

ascertain than the sufficiency of the conduct remedies Microsoft 

proposed. See du Pont, 366 U.S. at 333-34 (noting burdens of monitoring 

compliance with a conduct remedy); St. Alphonsus, 778 F.3d at 792 

19 

The 

agreements' terminable and changeable nature refutes the Former 

Attorneys Generals' assertion that they "are an immutable part of the 

competitive landscape." AG Br. at 3. Moreover, contrary to the Former 

AGs' view (AG Br. at 11), the FTC's position avoids piecemeal 

adjudication. Evaluating contracts entered to avoid antitrust scrutiny 

requires constant consideration of a shifting set of agreements. 

23 
(divestiture is “customary form of relief in § 7 cases,” especially with 

government plaintiff). Indeed, “in Government actions divestiture is the 

preferred remedy for an illegal merger or acquisition.” Cal. v. Am. 

Stores Co., 495 U.S. 271, 280-81 (1990). Conduct remedies like 

Microsoft’s contracts are generally “disfavored.” Steves & Sons v. JELDWEN, Inc., 988 F.3d 690, 720 (4th Cir. 2021) (rejecting contract remedy 

as insufficient to address harm to competition). Appellees have not 

attempted to explain why their conduct remedies should be preferred 

over structural relief. 

Second, the proposed remedies in those cases had been offered or 

incorporated into the merger agreements, enabling the FTC and district 

court to subject the proposals to careful scrutiny, including after full 

discovery. Memorandum Opinion, FTC v. Arch Coal, Inc., No. 1:04-cv00534 (ECF_67) (D.D.C. July 7, 2004), at 4-5 (cleaned up); Libbey, 211

F. Supp. 2d at 45-46. By contrast, in this case, the FTC was denied 

meaningful discovery to vet many of Microsoft’s post-complaint side 

deals. Microsoft claimed privilege over any real-world analyses of these 

deals, see ECF_309 at 156-159 [2-FER-25-28], and, except Nvidia’s, the 

side-deals either came in after close of discovery, involved foreign 

24

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25

companies not subject to U.S. discovery, 6/28/23 Hr’g Tr. (Carlton 

(Defendants’ Expert)) at 893:16-896:19 [1-SER-229], or both. 

Third, in both Sysco and Libbey, the courts granted preliminary 

relief. Sysco, 113 F. Supp. 3d at 72-78; Libbey, 211 F. Supp. 2d at 55. 

Far from demonstrating that courts may deny preliminary relief based 

on eleventh-hour promises not to engage in foreclosure, those cases 

show the high burden that merging parties bear to substantiate the 

sufficiency of even structural remedies. 

2. In Any Event, Appellees Have Not Shown 

That Their Proposed Remedies Are 

Adequate.

Even if Appellees’ proposed remedies—that is, their postcomplaint side-deals—could be considered at the preliminary injunction 

stage, those still would need to effectively eliminate the merger’s 

competitive harm. See FTC Br. 50-55. The “crucial question” regarding 

remedies in a Section 7 case is whether the record supports a conclusion 

that the remedy “reasonably assures the elimination” of the merger’s 

competitive harms. du Pont, 366 U.S. at 325-26. The district court did 

not undertake any such analysis—in large part because Microsoft failed 

to offer evidence about the deals’ potential market impact. See FTC Br. 

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26

50-55. But it was Appellees’ burden to show that the deals would in fact 

negate the merger’s harmful effects. St. Alphonsus, 778 F.3d at 788. 

The district court’s reliance on the side deals to deny relief, 

without adequate evidence or analysis of their impact on competition, 

was plainly wrong. That is especially true in light of the court’s

acknowledgement that the availability of Activision’s content outside of 

Microsoft’s platforms and devices was “not guaranteed.” 6/28/23 Hr’g Tr. 

1115:19-1116:2 [1-SER-285]. 

On appeal, Appellees make no effort to address the sufficiency of 

their contracts. M/A Br. 59-60. Appellees instead highlight conflicting 

evidence about the terms of the contracts. M/A Br. 59-60. But that 

conflicting evidence should have led the court to grant the preliminary 

injunction so that the Commission could undertake a full examination 

of the contracts in the merits proceeding. Warner Commc’ns, 742 F.2d 

at 1162. 

Appellees proceed from two incorrect premises in arguing that the 

district court’s erroneous handling of remedies was harmless. First, 

regardless of whether the court relied on one of the proposed remedies—

the Sony offer—in finding no incentive for foreclosure in the console 

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market (M/A Br. 61), the court did rely on the Sony offer in denying the 

preliminary injunction, Op. 52 [1-ER-53]. Second, contrary to Appellees’ 

assertion that Activision games putatively would not have been 

available to subscription and cloud customers absent the merger (M/A 

Br. 61), the record evidence of Activision’s past conduct and future 

economic incentives raised serious questions on that issue that the 

Commission should be permitted to examine. See pp. 10-11 supra. 

II. THE DISTRICT COURT ERRED IN ITS TREATMENT OF PARTIAL 

FORECLOSURE AND THE BROWN SHOE LIABILITY 

FRAMEWORK

A. The FTC Consistently Demonstrated that the 

Merger is Likely to Lead to Harmful Partial 

Foreclosure

Echoing the district court and ignoring the record, Appellees 

assert that the “FTC did not raise [partial foreclosure] until the eve of 

trial” and had no expert testimony on the issue. M/A Br. 54. They are 

wrong on both counts.

The FTC argued partial foreclosure harms in all its pre-trial 

pleadings, including its complaint, ECF_1 at 28-30 [3-ER-554-556], 

original motion for relief, ECF_7 at 20-22 [3-ER-544-546], and reply 

brief in support of its preliminary injunction motion, ECF_131 at 10 [2-

FER-63]. The FTC’s proposed findings of fact and conclusions of law 

27

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28

addressed partial foreclosure as well. ECF_309 at 99-100, 179-180 [2-

FER-19-20, 2-FER-29-30]. Moreover, the FTC supported those 

arguments with both expert and non-expert evidence. See FTC Br. 66-

68; PX5000 at ¶ 381 [2-FER-91]; PX5001 at ¶ 267 & n.299 [2-FER-86]; 

ECF_309 at 99-100 [2-FER-19-20]; 6/27/23 Hr’g Tr. 609:23-25, 622 [1-

SER-157, 1-SER-160]. For example, Professor Lee addressed partial 

foreclosure in his opening report, PX5000 at ¶ 381 [2-FER-91], rebuttal 

report, PX5001 at ¶ 267 & n.299 [2-FER-86], written direct testimony, 

ECF_224 at ¶ 89 [2-FER-43-44], and trial testimony. 6/27/23 Hr’g Tr. 

609:23-25, 621:5-622:24 [1-SER-157, 1-SER-160]. Appellees are thus 

wrong in asserting that partial foreclosure is a “later-added ... theory”

unsupported by evidence, including expert testimony. M/A Br. 54.

The district court made a core analytical error when it reasoned

that “[i]f the FTC has not shown a financial incentive to engage in full 

foreclosure, then it has not shown a financial incentive to engage in 

partial foreclosure.” Op. 45 [1-ER-46]; see FTC Br. 66-67; Amici Law 

Professors Br. 6-8. Firms can still have an incentive to partially 

foreclose rivals even if they lack incentives for full foreclosure. See

6/27/23 Hr’g Tr. 609:23-25, 621:5-622:24 [1-SER-157, 1-SER-160]. The 

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29

court’s application of an erroneous economic theory was legal error. See 

Penn State Hershey, 838 F.3d at 336. Further, the court failed to 

recognize that Microsoft can pursue profitable partial foreclosure by 

giving competitors inferior access to Activision offerings: for example, 

delayed or lower quality content, or increased licensing charges. Law 

Professors Br. 8; PX5000 at ¶ 477 n.718 [2-FER-94]. Those approaches

would lower the cost of foreclosure by allowing Microsoft to continue 

receiving licensing fees for partial access to the merged firm’s games 

while at the same time garnering profits from increased sales of Xbox

consoles. Law Professors Br. 7. The court also overlooked a significant

source of offsetting revenue: 

See PX4007 at 006 [2-FER-126]; PX1110 at 012 [3-ER-452]; 

PX5000 ¶¶ 312, 420, 582 [2-FER-88-89, 2-FER-92, 2-FER-98-99]. 

B. The FTC Convincingly Showed that the Merger 

May Harm Competition Under the Brown Shoe

Framework

In its opening brief (at 58-62), the FTC established that the 

district court did not consider the merger’s harms to competition under 

the Brown Shoe liability framework. Appellees characterize the FTC’s 

arguments as “late-raised,” M/A Br. 62, but those arguments were part 

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30

of this case from the outset—including the FTC’s TRO motion and its 

pre- and post-trial conclusions of law—and were not waived (M/A Br. 

64). See ECF_7 at 17-18 [2-FER-71-72]; ECF_175 at 109-112 [2-FER-52-

55]; ECF_309 at 180-183 [2-FER-30-33]. 

Among other things, the FTC demonstrated below that this 

merger reflected and would exacerbate a trend towards concentration. 

See Brown Shoe, 370 U.S. at 332-33. For example, during closing

arguments, the FTC explained that the merger could cause Microsoft’s 

competitors to purchase other large content developers, which would be 

an “aggravating, not a mitigating factor” under Brown Shoe. 6/29/23 

Hr’g Tr. 1156:1-7 [1-SER-295]. Appellees wrongly conclude that because 

the FTC did not bring a horizontal challenge, the FTC’s evidence of a 

trend toward concentration is irrelevant. Id. at 63-64. Not so. Brown 

Shoe included a vertical merger challenge and clearly instructs that any 

“trend toward concentration” or “vertical integration” is an “important 

factor to consider.” 370 U.S. at 332-33. 

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31

More generally, Appellees fail to engage with the Brown Shoe

factors. M/A Br. 62-66.20 The FTC, however, presented compelling 

evidence that the “nature and purpose” of the acquisition is 

anticompetitive because it would “transform an independent, ‘platformagnostic’ source of supply into a captive one controlled exclusively by 

Microsoft.” ECF_309 at 181-82 [2-FER-31-32]; see also 6/28/23 Hr’g Tr. 

Kotick (Activision) 742:5-13 [1-SER-191]; PX3378 (Sony) at 11-12 [2-

FER-101-102]. The FTC also showed a trend towards further 

concentration within the industry, which “may accelerate as future 

entrants” vertically integrate in response. ECF_309 at 182 [2-FER-32]; 

see also 6/23/23 Hr’g Tr. Zimring (Google) 479:14-16 [1-SER-124]. In 

addition, the FTC showed that the acquisition would increase already 

high entry barriers in all three markets. ECF_309 at 182 [2-FER-32]; 

6/23/23 Hr’g Tr. Spencer (Microsoft) 361:12 [1-SER-95]. Brown Shoe

thus provides another basis for preliminary relief.

20 These factors include: “the size of the share of the market 

foreclosed,” the “nature and purpose of the arrangement,” any “trend 

toward concentration in the industry,” and entry barriers, among 

others. Brown Shoe, 370 U.S. at 328-34. 

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32

III. THE EQUITIES STRONGLY FAVOR A PRELIMINARY 

INJUNCTION. 

Preliminary relief is necessary to ensure that, if the Commission 

concludes Appellees’ merger violates the Clayton Act, “premerger 

competition” can be recreated. Heinz, 246 F.3d at 726. In enacting 

Section 13(b), Congress determined that allowing a merger to be 

consummated and then directing divestiture at a later point “is an 

inadequate and unsatisfactory remedy in a merger case, a point that 

has been emphasized by the United States Supreme Court.” Id. (citing

FTC v. Dean Foods Co., 384 U.S. 597, 606 n.5 (1966)). A core premise of 

Section 13(b) is that divestiture after consummation often is not

adequate to restore the competition that would have existed but-for the 

merger. See, e.g., Heinz, 246 F.3d at 726; Whole Foods, 548 F.3d at 1034

(Tatel, J., concurring). Appellees assert that Congress’s concerns are not 

implicated by a vertical merger (M/A Br. 66), but Congress created no 

vertical merger exception to Section 13(b) of the FTC Act or Section 7 of 

the Clayton Act, both of which apply to all mergers, “horizontal, 

vertical, conglomerate, [or other].” FTC v. Procter & Gamble Co., 386 

U.S. 568, 577 (1967). 

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33

Further, there is no evidence here that divestiture after a merits 

proceeding could “recreate pre-merger competition.” Heinz, 246 F.3d at 

726; see also Warner Commc’ns, 742 F.2d at 1165. Upon consummation, 

Appellees’ relationships with the entire gaming ecosystem will change, 

given the size of the transaction and Activision’s role as a leading AAA 

content developer. The FTC’s evidence showed that hardware 

manufacturers now collaborate with Activision to ensure a high-quality 

gaming experience for consumers, sharing competitively sensitive 

information. FTC Br. 35 (citing record evidence). Post-acquisition, such 

information sharing likely would cease, eliminating this source of 

innovation competition. Id. At the same time, Microsoft and Activision 

will be free to share confidential, strategic information between 

themselves—a bell the Commission cannot un-ring later. FTC Br. 71-

72.

Appellees’ argument that preliminary relief is unnecessary to 

preserve the status quo fails to account for the new entanglements 

created between the merged firm and competitors as a result of the 

remedial contracts they have executed. Appellees provide no 

explanation, let alone evidence, for how these complex arrangements—

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34

which may implicate the rights of non-parties—will be unwound if the 

Commission finds the merger unlawful. Thus, Congress’s concern with 

the difficulties of “unscrambling the egg” apply equally to this vertical 

deal as to horizontal mergers.

Appellees’ other arguments regarding the equities are likewise 

readily disposed of. Appellees continue to assert, contrary to all 

evidence, that a preliminary injunction will prompt them to abandon 

the deal. M/A Br. 69. As noted, the UKCMA’s prohibition on closing had 

no such effect. See n.11 supra. Microsoft and Activision have shown 

themselves willing and able to extend their closing deadline, and they 

identify no reason why they are unable to do that again if this Court 

reverses. Further, Appellees have not shown why, if the deal is paused, 

Microsoft and Activision will be unwilling or unable to proceed should

the merger be found lawful in the administrative proceeding. Both 

companies are profitable, well-capitalized, and leaders in their 

industries. Neither is at risk of failing if the merger is paused. In any 

event, the merging parties’ own interests, such as financial benefits to 

shareholders (see M/A Br. 69), are private equities which receive little 

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35

weight under Section 13(b). See Warner Commc’ns, 742 F.2d at 1165; 

Heinz, 246 F.3d at 727 n.25. 

Appellees provide no proof that consumers would benefit from 

agreements conditionally expanding availability of Call of Duty. M/A 

Br. 67. The FTC repeatedly asked Appellees’ lead witnesses whether 

they had examined the economic or competitive effects of these 

agreements, and without exception they replied that they had not. See, 

e.g., 6/29/23 Hr’g Tr. Stuart (Microsoft) 934:5-20 [1-SER-240]; 6/23/23

Hr’g Tr. Spencer (Microsoft) 336:16-338:5 [1-SER-89]; 6/28/23 Hr’g Tr. 

Carlton (Microsoft) 886:5-890-9 [1-SER-227-228]. 

Finally, Activision’s contracts to provide Call of Duty to other 

platforms fail as an equity, public or private. See M/A Br. 67. First, as 

discussed above, those contracts do not remedy the harm to the 

competitive process associated with Microsoft’s acquisition. See pp. 17-

20 supra. Second, contrary to Appellees’ contention, id. at 68, the FTC’s 

concerns about this merger involve Microsoft’s acquiring the leading 

independent AAA game developer, not just access to Call of Duty.21 

21 See PX7007 (Stuart (Microsoft) IH) at 98:11-99:17 [2-FER-111-112]; 

PX7006 (Kotick (Activision) IH) 49:9-49:15 [2-FER-114]; PX1741 

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36

. E.g., PX3378 Ryan (Sony) 

Hr’g Tr. 64:10-15 [3-ER-407]. 

As this Court has found, in weighing equities, “public equities 

receive far greater weight” and “private equities alone do[] not justify 

denial of a preliminary injunction.” Warner Commuc’ns, 724 F.2d at 

1165. Here, the FTC has shown a likelihood of success by raising 

serious questions going to the merits. Id. at 1162. Accordingly, this 

Court should give great weight to the public equity in effective 

enforcement of the antitrust laws and in preserving the Commission’s 

ability to order meaningful relief in its merits proceeding. See id. at 

1165; Heinz, 246 F.3d at 726. 

(Microsoft) at 011 [2-FER-122]: PX2113 (Activision) at 010 [2-FER-119]; 

PX4743 (Microsoft) at 014 [2-FER-121]; PX7011 (Spencer (Microsoft) IH 

Vol. I) at 118:14:119:10 [2-FER-106]; PX7008 (Schnakenberg 

(Activision) IH) at 174:21-175:15 [2-FER-108-109]; PX2115 (Activision) 

at 001 [2-FER-120]; PX2406 (Activision) at 001 [2-FER-117]. 

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37

CONCLUSION

The Court should reverse and enjoin the proposed acquisition

pending the outcome of the administrative adjudication.

Respectfully submitted,

HENRY LIU ANISHA S. DASGUPTA

Director General Counsel

JOHN NEWMAN MARIEL GOETZ

Deputy Director Acting Director of Litigation

SHAOUL SUSSMAN

Associate Director for Litigation

/s/ Mark S. Hegedus 

IMAD D. ABYAD

JAMES H. WEINGARTEN MARK S. HEGEDUS

PEGGY BAYER FEMENELLA

JAMES ABELL

CEM AKLEMAN

MEREDITH R. LEVERT

JENNIFER FLEURY

Attorneys

BUREAU OF COMPETITION

Attorneys 

FEDERAL TRADE COMMISSION

600 Pennsylvania Avenue, NW

Washington, DC 20580

(202) 326-2115

mhegedus@ftc.gov

Counsel for

Federal Trade Commission

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29(a)(5), Cir. R. 29-2(c)(2), or Cir. R. 29-2(c)(3). 

[ ] is for a death penalty case and complies with the word limit of Cir. 

R. 32-4.

[ ] complies with the longer length limit permitted by Cir. R. 32-2(b) 

because (select only one): 

[ ] it is a joint brief submitted by separately represented parties. 

[ ] a party or parties are filing a single brief in response to 

multiple briefs.

[ ] a party or parties are filing a single brief in response to a 

longer joint brief.

[ ] complies with the length limit designated by court order dated _____.

[ ] is accompanied by a motion to file a longer brief pursuant to Cir. R. 

32-2(a).

Signature /s/ Mark S. Hegedus Date September 27, 2023 

(use “s/[typed name]” to sign electronically-filed documents) 

Feedback or questions about this form? Email us at forms@ca9.uscourts.gov

Form 8 Rev. 12/01/22

Case: 23-15992, 11/13/2023, ID: 12823233, DktEntry: 112, Page 42 of 43
CERTIFICATE OF SERVICE 

I certify that on November 13, 2023, I filed the foregoing with the 

Court’s appellate CM/ECF system. Counsel for defendants-appellees are 

registered users of the Court’s appellate CM/ECF system. 

/s/ Mark S. Hegedus 

MARK S. HEGEDUS

Date: November 13, 2023 Attorney

FEDERAL TRADE COMMISSION

Case: 23-15992, 11/13/2023, ID: 12823233, DktEntry: 112, Page 43 of 43