What Will the European Commission Tell Us About Microsoft’s Acquisition of Activision Blizzard, Xbox, and a Game Maker’s Choice?
Outside of the European Union, Microsoft’s Activision Blizzard acquisition has also faced opposition from UK and US regulators. The USA’s Federal Trade Commission filed a legal challenge to block the acquisition in early December 2022, arguing that it would “enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.” Meanwhile, the UK’s Competition and Markets Authority said the deal “could result in higher prices, fewer choices, or less innovation for UK gamers,” in provisional filings announced earlier this month.
“We continue to believe that this deal will expand competition and create more opportunities for gamers and game developers,” Brad Smith, Microsoft’s vice chair and president, said in a statement to The Verge. “We have been committed since Day One to addressing competition concerns, including by offering earlier this week proposed concessions to the FTC. While we believe in giving peace a chance, we have complete confidence in our case, and are happy to present our case in court.
In an email sent to employees and provided to CNN, Activision CEO Bobby Kotick said the FTC suit may sound “alarming” but he remains confident the deal will close. He said that the allegation that this deal is anti-competitive doesn’t line up with the facts.
The outcome of today’s meeting and the EU’s decisions in the coming weeks will undoubtedly shape whether Microsoft will head to court to defend its deal in Europe and beyond.
The European Commission will now need to decide how it handles objections to Microsoft’s deal. The antitrust warning was issued against Microsoft after it sent its statement of objections. The EU hasn’t published those objections publicly yet, and onlookers are waiting to see if lawmakers in Europe take a similar stance to the UK, with concerns around cloud competition and game exclusivity.
Smith said earlier today that Microsoft had signed a contract with Nintendo to bring Call of Duty to Nintendo consoles. Smith tweeted the announcement this morning, before a meeting with reporters where he said Microsoft is willing to accept regulatory undertakings to get the deal approved in Europe.
Spencer said that the Digital Markets Act is one of those things that they are planning for. It is a huge opportunity, that is what I think. Microsoft has a small presence in mobile gaming right now, and the Xbox maker admitted that in a filing with the UK’s Competition and Markets Authority (CMA) last year: “Microsoft currently has no meaningful presence in mobile gaming and the [Activision Blizzard] transaction will bring much needed expertise in mobile game development, marketing and advertising.”
Sony has argued that the acquisition by Microsoft could lead to price rises and hurt developers, and it accused Microsoft of paying developers to keep their games off of the service.
Microsoft has announced that The Elder Scrolls VI will only be available on its platforms and confirmed Starfield will be exclusive.
It is pointless for a transaction to be prevented from closing. Our industry has enormous competition and few barriers to entry. We have seen more devices than ever before enabling players a wide range of choices to play games. The tools and engines can be used by many small and large developers. There are a lot of distribution options for games. We believe in the merits of the case.
Even though we have faith in our case, we are committed to creative solutions that will protect consumers and workers in the tech sector. As we’ve learned from our lawsuits in the past, the door never closes on the opportunity to find an agreement that can benefit everyone.
How Nintendo Can Get Its Own Xbox Game, and How Microsoft Can Ensure Mobile Apps Can Compete with Google, Apple, and Sony
Smith is fond of referring to “Xbox games” more generally than just Call of Duty, but he doesn’t give details on what franchises these may come from.
Microsoft’s defense is bound to single out Sony, and perhaps even Google, as the opposition to this deal, with Microsoft’s allies including Nintendo, Valve, and even the Communications Workers of America union and UNI Global Union. On the eve of the crucial EU meeting the CWA urged the EU to consider the positive impact the Microsoft-Activision merger could have on the video game labor market.
“We’re more than willing, given our strategy, to address the concerns that others have, whether it’s by contracts, like we did with Nintendo this morning, or whether it’s by regulatory undertakings, as we’ve consistently been open to addressing,” said Smith, in a meeting attended by Bloomberg.
The possibility of a behavioral remedy for Call of Duty, including a partial sale of the business to another company, seems to be one that is open to treatment by the CMA. Today’s meeting will highlight the European Commission’s main concerns and any potential remedies Microsoft may need to consider ahead of an April 11th deadline for a final decision.
While Microsoft is building an Xbox mobile store, it will need regulators to take action against Apple and Google to ensure such a store can thrive on Android and iOS devices. Apple doesn’t allow alternative stores on its iPhone and iPad devices, and even rival payment methods aren’t available in most countries.
Companies like Microsoft and Spotify are hoping the EU’s Digital Markets Act will force Apple and Google to change how they distribute apps on mobile devices, and ultimately open their platforms and stores up to competition.