Xbox has developed a novel tactic for defending its Activision Blizzard acquisition, which continues to wind its way through various regulatory bodies around the world: self-deprecation.
In response to claims by concerns raised by the UK’s Competition and Markets Authority [CMA], Microsoft released a lengthy statement to GamesIndustry.biz calling the criticism is “unsupported” and pointing to PlayStation’s leading place in the market as a reason why.
“The suggestion that the incumbent market leader, with clear and enduring market power, could be foreclosed by the third largest provider as a result of losing access to one title is not credible,” Microsoft said in a statement.
While Microsoft didn’t share figures, the company says that if every Call of Duty player on PlayStation’s consoles switched to Xbox, “the PlayStation gamer base remaining would be significantly larger than Xbox.”
“In short, Sony is not vulnerable to a hypothetical foreclosure strategy, and the Referral Decision incorrectly relies on self-serving statements by Sony which significantly exaggerate the importance of Call of Duty to it and neglect to account for Sony’s clear ability to competitively respond,” Microsoft’s statement said. “While Sony may not welcome increased competition, it has the ability to adapt and compete. Gamers will ultimately benefit from this increased competition and choice.”
As far as the CMA’s concerns about the streaming market, Microsoft says it has “no advantage,” and says Xbox feels it has a “number of significant disadvantages” in comparison to other competitors because of the relatively limited platform support for Xbox Cloud Gaming. The company also says that adoption of video game streaming is relatively low, and that undermining the market in any way would only have long term damaging effects to its own products.
Microsoft isn’t happy with the UK’s CMA regulator over its Activision Blizzard acquisition comments. It describes the regulator’s concerns as “misplaced” and that it “adopts Sony’s complaints without considering the potential harm to consumers” ? ? 1/3 pic.twitter.com/nIWuVqyvSW
— Tom Warren (@tomwarren) October 12, 2022
“Xbox, as a platform which is in last place in console, seventh place in PC and nowhere in mobile game distribution globally, has no incentive to do this – instead its incentive is to encourage the widespread adoption of cloud gaming technologies by as many providers as possible to encourage the major shift in consumer behaviour required for cloud gaming to succeed,” the statement read.
As noted by The Verge’s Tom Warren, Xbox also claimed that Sony “has chosen to block Game Pass from PlayStation” while protecting its own first-party games.
Throughout its response, Xbox emphasizes Sony’s strength in the market while positioning itself as a weaker competitor. It’s all part of a major attempt to influence global opinion on the acquisition, which will add World of Warcraft, Call of Duty, and other major franchises to a stable that already includes the likes of Halo, Fallout, and Skyrim, even going so far as to open a website touting the benefits of the acquisition.
Sony, for its part, has slammed the buyout as having “major negative implications for gamers” while praising the CMA.
‘Xbox could harm the competitiveness of its rivals’
Xbox was responding to the CMA’s initial report, the full text of which was published today. The CMA says it fears Microsoft absorbing a third-party company as expansive as Activision Blizzard will be damaging to the PlayStation brand. Alongside the possibility of making Activision Blizzard games like Call of Duty exclusive to Xbox and Windows platforms, the CMA points out having those games exclusively on Microsoft services like Xbox Cloud Gaming could have similar implications for video game streaming platform competitors like Amazon, and Nvidia.
“The CMA is concerned that having full control over this powerful catalogue, especially in light of Microsoft’s already strong position in gaming consoles, operating systems, and cloud infrastructure, could result in Microsoft harming consumers by impairing Sony’s – Microsoft’s closest gaming rival – ability to compete as well as that of other existing rivals and potential new entrants who could otherwise bring healthy competition through innovative multi-game subscriptions and cloud gaming services,” the authority wrote in its report.
As of this writing, Activision Blizzard games have not been made exclusive to Xbox platforms and services, and Microsoft has said it plans to bring Call of Duty to PlayStation. But the CMA says this may change as Microsoft continues to invest in and grow these businesses in the future.
“The CMA recognises that ABK’s newest games are not currently available on any subscription service on the day of release but considers that this may change as subscription services continue to grow. After the Merger, Microsoft would gain control of this important input and could use it to harm the competitiveness of its rivals,” the CMA wrote.
The CMA’s investigation will continue into January, when it will release its second phase of findings. The final report will be complete by March 1 of next year.
Kenneth Shepard is a writer covering games, entertainment, and queerness all around the internet. Find him on Twitter at @shepardcdr, and listen to his biweekly video game retrospective podcast Normandy FM, which is currently covering Cyberpunk 2077.