Microsoft is not happy with Sony and the British Competition and Markets Authority. The UK regulator last month announced an in-depth review of Microsoft’s $68.7 billion deal to acquire Activision Blizzard, and the CMA has now published its full 76-page report (PDF) about his findings. The CMA says it’s concerned that Microsoft’s Activision Blizzard deal could reduce competition on game consoles, subscriptions and cloud gaming, but Microsoft believes the regulator has simply listened too much to Sony’s lawyers.
Microsoft pleaded for its deal on the day of the Phase 2 decision last month, but now the gloves are well and truly off. Microsoft describes the CMA’s concerns as “misguided” and says the regulator “adheres to Sony’s complaints without regard to the potential harm to consumers” and “incorrectly relies on Sony’s self-righteous statements that promote the interest of Duty.” Microsoft even accuses the CMA of taking over “Sony’s complaints without the proper level of critical assessment,” suggesting that the regulator is simply listening too much to what Sony has to say.
At the heart of all the back and forth is access to Duty and concerns about the future of game subscriptions. “The CMA recognizes that ABK’s latest games are not currently available on a subscription service on release day, but believes this may change as subscription services continue to grow,” says the British regulator. “After the merger, Microsoft would gain control of this important input and use it to hurt the competitiveness of its rivals.”
Microsoft’s full response to the CMA, as seen by The edge, also includes parts where the company, comically, tries to make it look like it’s somehow bad at gaming and can’t compete. Microsoft says Xbox is “last on console” and “seventh on PC” and “nowhere in global mobile game distribution,” and Microsoft says it has no reason to harm rival cloud gaming services or downgrade it, because it is “the major shift in consumer behavior needed for cloud gaming to succeed.”
Microsoft may be last in console sales during the previous generation, but it’s certainly investing billions of dollars to ensure that future Xbox sales are no less than half the PlayStation’s and that its Xbox Game Pass bet pays off.
Sony and Microsoft have been fighting over it too Duty, and the CMA acknowledges this by revealing its concern about Sony’s future revenues related to Duty. “PlayStation currently holds a larger share of the console gaming market than Xbox, but the CMA believes that” Duty is sufficiently significant that losing access to it (or losing access on competitive terms) could have a significant impact on Sony’s revenues and user base.”
Sony has shown how important Duty is after it is labeled Microsoft’s offer to keep Duty on PlayStation “insufficient on many levels.” The edge revealed last month that Microsoft Gaming CEO and Xbox chief Phil Spencer made a written commitment to PlayStation head Jim Ryan earlier this year to abide by it. Duty on PlayStation for “a few more years” outside of the existing marketing deal Sony has with Activision. “After almost 20 years Duty on PlayStation, their proposal was inadequate in many ways and did not take into account the impact on our gamers,” said PlayStation head Jim Ryan.
Now Microsoft says keep it Duty on PlayStation is a “commercial imperative for the Xbox business and the economics of the transaction”. Microsoft says it would jeopardize revenue if it shut down Duty from PlayStation and that “Microsoft has been clear that it is counting on revenue from the distribution of Activision Blizzard games on Sony PlayStation.”
Microsoft also accuses Sony of not welcoming competition from Xbox Game Pass and that Sony has decided to block Game Pass on PlayStation. “This increased competition has not been welcomed by the industry leader Sony, which has chosen to protect its revenues from the sale of newly released games, rather than give gamers the choice to use them through its subscription, PlayStation Plus.” This comes just months after Microsoft claimed in legal files that Sony is paying for “blocking rights” to keep games from Xbox Game Pass.
If the British battles have anything to offer, this takeover could get messy as Microsoft and Sony battle it out behind the scenes to influence regulators. Microsoft even has a special website to emphasize its arguments while trying to convince regulators that its mammoth deal isn’t bad for gamers. We’re still months away from the regulators’ final decisions, but get ready for this battle that will spread onto the streets of the internet.