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Microsoft criticized Sony and UK regulators amid a challenge to the proposed Activision Blizzard acquisition, saying the UK relied too much on Sony’s “self-service” arguments.
The UK’s Competition & Markets Authority (CMA) referred the $68.7 billion deal to a Phase 2 investigation last month, which could lead to the merger being banned or some parts of the company having to be sold. The CMA released the full text of its referral decision today, and Microsoft has provided Ars with the summary of its latest response to the regulatory agency.
Sony has argued that Microsoft could pull Duty from PlayStation, says Microsoft’s offer to keep the Activision Blizzard game series on PlayStation for at least three years beyond the current agreement is inadequate.
In its filing with UK regulators, Microsoft said that PlayStation “has been the largest console platform for over 20 years” and that it is “not credible” to suggest “that the incumbent market leader, with clear and lasting market power, could be foreclosed by the third largest provider due to the loss of access to one title.” Microsoft continued in its response to the CMA:
In short, Sony is not vulnerable to a hypothetical foreclosure strategy, and the order for reference is erroneously based on Sony’s self-righteous statements that Duty and failure to take into account Sony’s apparent ability to respond competitively. The CMA’s assessment of this theory ignores the referral’s admission that the gambling industry is “dynamic”. While Sony may not welcome the increased competition, it has the ability to adapt and compete. Gamers will ultimately benefit from this increased competition and choice.
Microsoft: Duty worry exaggerated
Microsoft submitted its full response to the CMA’s Phase 1 analysis this week. The full document is not yet public, but Microsoft made the summary public today.
“The CMA’s theories on damage relate to one overarching concern: Activision Blizzard’s game catalog — specifically, the Duty franchise – allows Xbox to foreclose its competitors in the gaming markets. This concern is misplaced,” said Microsoft’s response. “The referral decision recognizes the incredible array of popular and diverse game content available to market participants and overstates the importance of Activision Blizzard’s content to competition in gaming.”
Microsoft said it “intends to Duty franchise available to more gamers in more ways than would have been the case in the counterfactual.” The company also said Sony is exercising its own market power by “raising the prices of its consoles without fear of losing market share”.
Microsoft further pointed to Sony’s own recent game studio acquisitions, including: Lot 2-maker Bungie. Sony also has minority interests in Elden Ring-creator of Software and Epic Games. “There were more than 280 exclusive first- and third-party titles on PlayStation in 2021, almost five times as many as on Xbox,” Microsoft said.
We’ve reached out to Sony today and will update this article if we get a response.
