Microsoft Is Making A Poor Case For Its Activision Blizzard Acquisition

Yesterday, Microsoft put online a new website addressing its planned acquisition of Activision Blizzard as a way to try to convince regulators to approve the deal. To quote one of my readers “if you have to make a website to convince people you should be able to buy a company, maybe you shouldn’t be able to buy a company.”

While it does seem unlikely that anything will ultimately stop the nearly $70 billion acquisition, the longer this goes, the more ridiculous these arguments become. I’ve already addressed PlayStation’s Jim Ryan’s rather hypocritical comments about game exclusivity, but there’s no less nonsense on Microsoft’s side either.

They can’t just say “this is a big company with big games that make a lot of money,” they have to pitch this purchase as some sort of benevolent act of goodwill and player choice. They actually have an entire page of just quotes up that are supposed to help convince regulators that this is a good move and not problematic. They are…frankly absurd. I want to go through all of them here, right now:

“The European Commission’s review of the deal is progressing in line with the expected regulatory schedule and process, and we remain confident that the acquisition will close in fiscal year 2023.” – Microsoft Spokesperson, Sept. 30, 2022

Sure, I also remain confident that this acquisition is probably going to close eventually, but what else do they have to say?

“In January, we provided a signed agreement to Sony to guarantee Call of Duty on PlayStation, with feature and content parity, for at least several more years beyond the current Sony contract, an offer that goes well beyond typical gaming industry agreements.” – Microsoft Gaming CEO Phil Spencer, Sept. 2, 2022

This is the first of many references that try to pitch Sony as being okay with this, when Sony has made it excruciatingly clear they are very much not okay with this, and Jim Ryan has referenced this deal specifically in his own quotes:

“Microsoft has only offered for Call of Duty to remain on PlayStation for three years after the current agreement between Activision and Sony ends. After almost 20 years of Call of Duty on PlayStation, their proposal was inadequate on many levels and failed to take account of the impact on our gamers. We want to guarantee PlayStation gamers continue to have the highest quality Call of Duty experience, and Microsoft’s proposal undermines this principle.”

Does that sound like Sony’s on board with this to you?

“We’re ready to work with the CMA on next steps and address any of its concerns. Sony, as the industry leader, says it is worried about Call of Duty, but we’ve said we are committed to making the same game available on the same day on both Xbox and PlayStation. We want people to have more access to games, not less.” – Microsoft Vice Chair and President Brad Smith, Sept. 1, 2022

Again, Microsoft has only committed to making Call of Duty available on PlayStation for three years past the current deal, so there’s literally no guarantee that it stays on the platform indefinitely, as it would if it remained a third party publisher. And the “we want people to have more access to games, not less,” quote does not seem to apply to say, Starfield, a huge new IP that is spawning out of Microsoft’s also-massive Bethesda purchase that has no plans to come to PlayStation, even though it clearly would have if Bethesda had remained independent. And that is also likely to be true for many, many other games that have come out of Microsoft’s publisher buying spree.

“As we’ve said before, we are committed to making the same version of Call of Duty available on PlayStation on the same day the game launches elsewhere.” – Microsoft Gaming CEO Phil Spencer, Sept. 1, 2022

Right, but what Microsoft is not saying here is that owning Activision will allow them to put Call of Duty on Game Pass on day one, offering to its own players for “free” as part of that subscription, while PlayStation players will no doubt be charged the full $70 list price, part of which will be going directly in Microsoft’s pocket as the new publisher. If that’s not a massive competitive advantage, I’m not sure what is.

In addition, we hope that players will be eager to play traditional console games from Activision Blizzard on other platforms via our cloud game streaming technology.” – Microsoft Gaming CEO Phil Spencer, Sept. 1, 2022

This is perhaps one of Microsoft’s only coherent arguments that Activision Blizzard games will now in fact reach more overall players due to inclusion in Xbox’s cloud streaming. So I’ll give them that one, I guess.

“One of the things we’re being very clear about as we move forward with the regulatory review of this acquisition is that great titles like Call of Duty from Activision Blizzard today will continue to be available on the Sony PlayStation. We’d like to bring it to Nintendo devices. We’d like to bring the other popular titles that Activision Blizzard has and ensure that they continue to be available on PlayStation, that they become available on Nintendo. One of the first acquisitions after Satya Nadella became CEO was of Minecraft – that was back in September of 2014. And what we’ve done with that acquisition is a clear indicator of what we hope to do if we acquire Activision Blizzard. Namely, invest even more in innovation, bring it to more people, bring it to more platforms, and make it even more useful and more delightful for the people who use it.” – Microsoft Vice Chair and President Brad Smith, Feb. 10, 2022

This is a summary of what’s already been said, but again, it fundamentally comes down to whether you trust that Microsoft is going to do a Minecraft, in which they bought that game and left it on all platforms, including its rivals, or if eventually they are going to do a Bethesda, and start peeling off games that used to be multiplatform and making them exclusive to the Xbox ecosystem. It’s essentially the honor system, and once it’s under their umbrella, all bets are off.

“Too much friction exists today between creators and gamers; app store policies and practices on mobile devices restrict what and how creators can offer games and what and how gamers can play them. Our large investment to acquire Activision Blizzard further strengthens our resolve to remove this friction on behalf of creators and gamers alike. We want to enable world-class content to reach every gamer more easily across every platform – Microsoft Vice Chair and President Brad Smith, Feb. 9, 2022

I have no idea what this is supposed to mean. I think it’s some point about how taking these games to the cloud will avoid app stores acting as middlemen. But no, I don’t think there has been a terrible amount of “friction” getting people to buy say, Call of Duty every year, given its eternally massive sales.

“Had good calls this week with leaders at Sony. I confirmed our intent to honor all existing agreements upon acquisition of Activision Blizzard and our desire to keep Call of Duty on PlayStation. Sony is an important part of our industry, and we value our relationship.” – Microsoft Gaming CEO Phil Spencer, Jan. 20, 2022

This was in January, almost ten months ago, and Sony has been explicit about how much they hate this deal and want it killed. Jim Ryan just flew in to testify to regulators about how it should be stopped this week. You just cannot keep acting like Sony is on board with this. Not that Sony’s counter-arguments are great, but they’re far from some supportive ally, which you would imagine is the case reading all these quotes.

All of this is performative posturing and nonsense. I get that you say what you have to say to try to appease regulators but fundamentally this is a business deal. You are a huge company buying another huge company with a market cap that almost exceeds the entire value of some of your rivals. You want to make a lot of money selling their games or putting them on Game Pass. Your main rival does not want you to do that, obviously. That’s really it. Whether that should be allowed or not is the main debate, but given how much power a company like Microsoft ultimately wields, I imagine it’s going to get done sooner or later. But I’m tired of this “it’s really for the gamers” trope that does not practically apply here at all.

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