In an op-ed in the Wall Street Journal, Microsoft President Brad Smith went to task outlining the company's position on its blockbuster Activision-Blizzard acquisition, valued at $69 billion.
Recent rumors have been swirling that the FTC plans to sue to block the deal, or at least force Microsoft to climb down and offer Sony PlayStation (the market leader) some hefty concessions. The situation is somewhat unprecedented since it would mark the first time in history a regulator had stepped in to protect a market leader, despite the fact Microsoft has asserted repeatedly, and even offered to contractually commit to a 10-year deal to ensure Call of Duty remains on PlayStation.
A lot of the uproar revolving around the deal centers on Sony's protests that Microsoft may seek to foreclose the world's biggest shooter from PlayStation, despite the millions, and billions of dollars Microsoft would make by continuing to publish on its platform. Brad Smith explains that the entire point of this merger is offering consumers choice, through a Netflix-like low-cost streaming service, many of us know today as Xbox Game Pass.
Smith very quickly reiterates the fact that this deal is about Apple and Google ultimately, whose control over the entire mobile market has squeezed innovation and harmed competition with a very steep 30% fee across all app-based business models. Famously, Epic Games has booted off the Apple app store for declining to continue granting Apple 30% of Fortnite revenue, owing to the damage it was doing to their business model.
"Acquiring Activision Blizzard would enable Microsoft to compete against [Sony, Apple, Google] through innovation that would benefit consumers. While modern consumers can stream videos or music on multiple devices on low-cost subscription plans, many games can often only be individually purchased and downloaded onto one device. Microsoft wants to change that by offering consumers the option to subscribe to a cloud gaming service that lets them stream a variety of games on multiple devices for one reasonable fee. It would also benefit developers by allowing them to reach a much broader audience."
"To get subscribers to this service, Microsoft needs a full library of popular games and, as things stand, we simply don’t have enough. That’s where the acquisition comes in. Activision Blizzard comes with popular mobile, PC and console games, including “Candy Crush,” “World of Warcraft” and “Call of Duty.”"
Smith emphasized and confirmed the reported 10-year licensing deal for Call of Duty, which would be unprecedented in the gaming industry, committing to putting the licensing deal in writing across major markets like the UK, EU, and United States. Microsoft also emphasized its commitment to allow Activision-Blizzard workers to unionize, echoing the recent op-ed from CWA union leader Chris Shelton who recently came out strongly in support of the deal.
In our view
In my own view, the rumors of a rift within the FTC over whether or not to sue to block this merger represents something of an ideological clash, with the FTC seemingly arbitrarily seeking to "rein in big tech" owing to the prevailing moral panic over the dominant positions of companies like Google, Amazon, and Meta, who dominate their respective vertices more often to the detriment of consumers.
Google has repeatedly abused its search position to promote its own products and has been sued for it. Meta has been fined repeatedly for mishandling consumer data. And Amazon's anti-unionization practices and maltreatment of its warehouse staff are well-documented. It would be ridiculous for the blowback inspired by actual monopolistic tech company abuse to retroactively, and speculatively, impact this deal, with the FTC projecting its past failures onto this specific acquisition.
Microsoft has been quite aggressive in promoting openness with Windows while offering such a large and unprecedented concession over Call of Duty. Microsoft is also among the most prolifically pro-union tech companies out there — at a time when the Democratic establishment literally changed the law to block rail workers' democratic right to striking for the very basic ask of paid sick leave, which is something we wholly take for granted in Europe. The hypocrisy is deep and very visible.
Increasingly, the FTC's position looks like politically motivated posturing, and largely untenable. It'll be interesting to see where all of this goes.
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Jez Corden a Managing Editor at Windows Central, focusing primarily on all things Xbox and gaming. Jez is known for breaking exclusive news and analysis as relates to the Microsoft ecosystem while being powered by caffeine. Follow on Twitter @JezCorden and listen to his Xbox Two podcast, all about, you guessed it, Xbox!
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