A Step Towards Peace in the Warzone: The FTC’s Case Against The Microsoft Buy-out of the Call of Duty Franchise
The franchise has grown beyond just the premium releases. With things like Call of Duty: Mobile, the Warzone battle royale (which is getting a 2.0 release later this month), and the upcoming mobile Warzone release in 2023, it seemed like the company could have taken a year off to focus on other Call of Duty games and services.
In its earnings, they warned that it may not be possible for them tolicense several of their games in China with a third party. The agreements contributed 3 percent of the company’s consolidated net revenues, but they will be expired in January 2023. “We are in discussions regarding the renewal of these agreements, but a mutually-satisfactory deal may not be reached.” The co-development and publishing agreement is unaffected because of a separate agreement.
According to a press release from the FTC, the agency filed a legal challenge to stop Microsoft from buying the company. The lawsuit was filed today after weeks of back and forth between Microsoft, Sony, and regulators over competition concerns and the future of Call of Duty. The FTC believes that the acquisition would enable Microsoft to suppress its competitors in gaming consoles, subscription content and cloud gaming.
The FTC is challenging one of the largest tech purchases in history, the $69 billion acquisition by Microsoft.
Brad Smith, Microsoft’s president, said in a statement Thursday that the deal will expand competition and create more opportunities for game developers. We have been committed to addressing competition concerns since Day One and offered changes to the FTC earlier this week. While we believed in giving peace a chance, we have complete confidence in our case and welcome the opportunity 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 does not align with the facts.
The European Union is considering whether to approve or disapprove of the Microsoft deal.
Officials in the United Kingdom and the European Union have also scrutinized the deal as potentially anticompetitive. But the FTC complaint marks the first attempt by an antitrust regulator to block the deal outright.
Microsoft avers that it lacks knowledge or information sufficient to form a belief as to the truth of the allegations concerning industry perceptions of Call of Duty and Call of Duty’s original release date; or as to the truth of the allegations concerning Call of Duty’s launch and typical release schedule and the resources and budget Activision allocates to Call of Duty, including the number of studios that work on Call of Duty.
The company’s corporate vice president of communications, Frank X. Shaw, also tweeted a link to a document titled: “Get The Facts: How Microsoft is Committed to Growing Gaming Communities.”
Microsoft has also accused Sony of paying developers to keep their content off of its Xbox Game Pass service, and Sony has even argued that Microsoft’s Activision Blizzard acquisition could “hurt developers and lead to price rises.”
In a complaint on Dec. 8, the FTC said its concern was that Activision’s popular games, including “World of Warcraft” and “Diablo,” potentially would stop being offered on devices that rival Microsoft’s Xbox. It set a hearing before an administrative law judge for August 2023.
What Do We Know About Microsoft and the War on Crime? The Case of Call of Duty: UNI, the CWA, and the EU
The Biden administration has taken a more aggressive approach to antitrust enforcement. The US Department of Justice stopped a merger of two book publishers, including the largest one in the world.
Those games aren’t named, though Microsoft has basically announced that The Elder Scrolls VI will only be available on its platforms, and confirmed Starfield will be exclusive.
There is no reason why the transaction shouldn’t be completed. There are few obstacles to entry in our industry. We’ve seen a lot of new devices that allow players to play a wide range of games. The engines and tools are available for free. There are a lot of distribution options for games. We believe we will win on the merits of the case.
Even with confidence in our case, we remain committed to creative solutions with regulators that will protect competition, 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.
I don’t believe that Microsoft doesn’t have more obscure details like the budgets of every Call of Duty studio, and that much of what Microsoft is asking the FTC to prove is obvious.
As well as Call of Duty, Smith’s tweet alludes to “Xbox games” more generally, though it doesn’t offer specifics on what franchises these may come from.
Microsoft will seek to single out Sony, and possibly even the company itself, as the opposition to this deal, with its allies including Nintendo and the Communications Workers of America union. The EU must seriously consider the positive impact the Microsoft-Activision merger will have on the video game labor market, urged both the CWA and UNI before this crucial meeting.
Smith said that he was more than willing to address the concerns others have, regardless of whether they were by contracts or regulatory undertakings.
While the CMA is open to behavioral remedies that could involve deals for Call of Duty, it seems to favor structural ones — including a suggestion that involves a partial divestiture of Activision Blizzard in the form of selling off the Call of Duty business. 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.
GeForce Now: A Gamer’s Guide through the Cloud (with an Empty Appearance of Games in the Cloud)
What does that mean for gamers like you and me? I got on the phone with Phil Eisler and he gave me both a big- picture answer as well as short term practical details to go with it.
The big picture, according to Eisler is that this deal could finally break the cloud gaming “chicken-and-egg” cycle and give enough games to attract enough players to convince publishers to provide more games.
They don’t sell games. Unless they’re free to play, you have to buy them from Steam, the Epic Games Store, and / or the Microsoft Store for now — and possibly Battle.net in the future should the Activision Blizzard deal go through. He says that this is what GeForce Now works like. “We can stream them to authorized owners.”
Even though Microsoft has its own Xbox Cloud Gaming service, GeForce Now may soon become the place to play Xbox games that live in the cloud. After this deal, he hopes that GeForce Now will become a significant player on the platform, which currently only has a fraction of what you would find on Steam.
Sound neat? You shouldn’t expect to get access to all Microsoft games right away, even if you own streaming rights for games you’ve already bought and that are free to play.
They plan on just a few games a week. He suggests that the company isn’t strong enough to do more than 10 games per week. While Nvidia plans to make the first Microsoft games available in the next few weeks from Steam and the Epic Games Store, he estimates it’ll take between six and 12 months to enable the Microsoft Store catalog and enable all existing games.
Source: https://www.theverge.com/2023/2/21/23609133/nvidia-microsoft-activision-blizzard-geforce-now-cloud-gaming-interview
What is the Odd Thing about the Eisler-Sonyaev-Seyfert-Sundrum Deal?
That is only an estimate, by the way. Eisler says the deal came together just last week, and the companies “haven’t worked on detailed implementation plans yet.”
“We’re really down to one principal company that is objecting to this deal, and that’s Sony, and we’ve made clear that we’re happy to enter a 10-year agreement with Sony and we’re prepared to enter regulatory obligations as well, whether it’s London or Brussels or Washington,” Smith said. “So, in addition to a contract, we’d have a duty under the law.”