Microsoft has slammed Sony and UK regulators amid a challenge to its acquisition project from Activision Blizzard, claiming the UK relied too heavily on Sony’s “selfish” arguments.
The UK Competition and Markets Authority (CMA) last month returned the $68.7 billion deal to a Phase 2 investigation, which could result in the merger being prohibited or parts of the business being required to be sold. The CMA today released the Full Text of its referral decision, and Microsoft provided Ars with the abstract of its latest response to the regulatory agency.
Sony argued that Microsoft could withdraw Call of Duty of Playstation, saying Microsoft’s offer to keep the Activision Blizzard series of games on PlayStation for at least three years beyond the current deal is insufficient.
In its filing with UK regulators, Microsoft said PlayStation “has been the biggest console platform for over 20 years” and that it was “not credible” to suggest “that the incumbent market leader , with clear and enduring market power, could be squeezed out by the third-largest supplier following the loss of access to a title.” Microsoft continued in its response to the CMA:
In short, Sony is not vulnerable to a hypothetical foreclosure strategy, and the dismissal decision wrongly relies on self-serving statements by Sony that greatly exaggerate the importance of Call of Duty to this and neglect to consider Sony’s obvious ability to respond competitively. The CMA’s assessment of this theory ignores its acknowledgment in the order for reference that the gaming industry is “vibrant”. While Sony may not welcome increased competition, it has the ability to adapt and compete. Players will ultimately benefit from this increased competition and choice.
Microsoft: Call of Duty exaggerated concerns
Microsoft submitted its full response to the CMA’s Phase 1 analysis this week. The full document is not yet public, but Microsoft released the executive summary today.
“The CMA’s theories of harm relate to an overriding concern: that Activision Blizzard’s catalog of games, particularly the Call of Duty franchise—will allow Xbox to oust competitors in gaming markets. This concern is misplaced,” Microsoft’s response said. “The dismissal order fails to recognize the incredible array of popular and diverse gaming content that is available to market participants and overstates the importance of Activision’s content. Blizzard for in-game competition.”
Microsoft said it “plans to make the Call of Duty franchise available to more gamers in more ways than would have been the case in the counterfactual.” The company also said that Sony exercises its own market power by “raising the prices of its consoles without fear of losing share Steps”.
Microsoft further highlighted Sony’s recent acquisitions of video game studios, including Destiny 2-Bungie manufacturer. Sony also holds minority stakes in Elden Ring-software maker and Epic Games. “There were over 280 first-party and third-party exclusive titles on PlayStation in 2021, nearly five times as many as on Xbox,” Microsoft said.
We reached out to Sony today and will update this article if we get a response.