We're now witnessing the first legal--albeit only procedural--dispute between Sony and Microsoft in connection with the latter's acquisition of Activision Blizzard King (NASDAQ:ATVI). After bringing three motions for an extension of time (related to a potential Sony motion to quash or limit Microsoft's subpoena) that Microsoft was fine with, Sony has now filed a fourth such motion (PDF), and Microsoft officially opposes it, which requires the Federal Trade Commission's Administrative Law Judge (ALJ) D. Michael Chappell to side with one party or the other.
Sony also has a problem with the FTC's own discovery request, which I find odd given that no one urged the FTC to start this in-house adjudicative proceeding as vehemently as Sony did.
Sony's lead counsel in the FTC's Microsoft-ActivisionBlizzard proceedings is Cleary Gottlieb's Bruce Hoffman. In my previous post (which compares the FTC's failed attempt to prevent Meta from acquiring VR startup Within to the Microsoft-ActivisionBlizzard case), I noted that this lawyer--who also represented Sony as a complainer over the Meta-Within deal--encouraged the FTC, via Bloomberg Law, to just keep on losing.
Mr. Hoffman filed his fourth motion for an extension of time on Thursday, and the FTC published it on Friday (the day on which the previous deadline expired). He asked for an extension until next Friday (February 10), and on Monday we'll see whether ALJ Chappell granted it. At some point Sony must know whether to fish or cut bait.
The motion is a strange. Significant parts of it are actually the stuff that belongs into a motion to quash or limit: it's mostly about why certain discovery requests made by Microsoft are deemed overreaching by Sony. But all that Sony is seeking right now is an extension of time, and after getting three extensions, it can hardly make the case that a fourth extension is reasonable. And Sony doesn't even rule out that it may seek a fifth extension ("[Sony Interactive Entertainment] anticipates that this will be its last request for an extension" (emphasis added)).
Sony complains that Microsoft didn't just agree on a single multi-week extension. But Microsoft has no obligation to waive its rights to oppose any Sony motion.
While I found the motion a bit tiresome to read, there are some tidbits in it that I'd like to share here:
Sony made a counterproposal to Microsoft, specifying what documents Sony is prepared to provide. The motion states that it "will cost approximately $2 million or more in fees and expenses and demand weeks of intense work and substantial efforts and involvement of [Sony Interactive Entertainment] personnel" just for Sony to make the productions it is willing to make. A sworn declaration is attached to the motion and says "[Sony Interactive Entertainment] would incur approximately $2 million or more in legal and related costs in connection with harvesting, processing, TAR [Technology Assisted Review] modeling, reviewing, and producing the documents."
Given that Sony's motion suggests it would be hugely more time-consuming to respond to Microsoft's actual discovery request, one can infer from all of this that Sony wants the judge to believe that it would cost many millions of dollars to comply.
Sony complains that Microsoft wants to see, inter alia, "executed copies of every content licensing agreement [Sony Interactive Entertainment] has entered into with any third-party publisher over the past 11 years." Frankly, I can't see why that is an unreasonable request. Sony will have a database of all those agreements, and given that Sony's own strategy is heavily content-centric, that discovery request seems par for the course to me. Those agreements will contain certain exclusivity arrangements that are relevant to the case (exclusive third-party titles, PlayStation-exclusive features, etc.).
Sony has been subpoenaed not only by the FTC and Microsoft, but also by class-action lawyers in the Northern District of California. In that case, Sony may soon bring a motion to quash or limit as the court only stayed depositions of Microsoft executives.
