Is FTC right to block Microsoft + Activision Blizzard merger
FTC Blocks Xbox + ABK merger
So, the news was brought out first on The Washington Post about FTC blocking the merger and the details are very clear.
The main gist of it is that the Federal Trade Commision (FTC) has decided to block the merger under the grounds that Microsoft has record of buying a company, in this case it’s ZeniMax, and decided to make several games like Starfield, Redfall and Elder Scrolls into exclusives. And in the FTC’s own press release, it has said “despite assurances it had given to European antitrust authorities that it had no incentive to withhold games from rival consoles”
It has also included Xbox Game Pass and Xbox Game Streaming as more reasons as to why this merger should not happen.
The FTC has also decided to comment on Microsoft having control over Activision may lead to Microsoft increasing the pricing of Activision’s games, degrading the quality of it’s games on rival consoles and changing the terms and timing of access to game content
Now that I have told you about the FTC’s concern about this merger and why they are looking to block it, I will now look to give you my opinion, which you may disagree and I’m ok with that.
Is the FTC doing the right thing?
I know what you are expecting me to say here, you are expecting me to say “FTC is wrong, and they shouldn’t block the merger” but you would be wrong.
I think FTC should certainly look into the merger and Microsoft should have more concessions as they have certainly shown that they are willing to change deals, but they shouldn’t be forced to make certain games be available on rival platforms. It doesn’t make any sense as to why they should. If you aren’t forcing Sony to make games multiplatform after they buy a company, you can’t force Microsoft to do the same. Especially since this is about competition.
When it comes to the FTC doing it for the right reasons, I think it’s nonsense.
Microsoft has already shown that it can and will withhold content from its gaming rivals. Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets.
It has seemed that FTC has forgotten that Sony/PlayStation makes deals all around the gaming industry that actively prevents games from being released on Xbox, Nintendo and timed release on PC, while being the leader in the gaming industry with a ¥369.9 billion ($2.5 billion) in game sales revenue, with a ¥179.2 billion ($1.21 billion) in hardware sales revenue (PS4 and PS5 console sales).
All while paying for deals to make third party games exclusive on PS4/PS5. Games like Final Fantasy 7 Remake, Forspoken and Death Stranding (Death Stranding is available on PC Game Pass through 505 Games).
On top of these deals, PlayStation has engaged in making deals for exclusive content on multi-platform games like Call of Duty and Avengers. Call of Duty allows PlayStation players additional content like skins and EX Boost that’s not accessible on Xbox or PC and Avengers excludes Spider-Man completely from Xbox and PC versions of the game.
What should the concessions be?
Since the story has evolved around Call of Duty, I will use Call of Duty as an example.
Simply put, Microsoft should ship all future Call of Duty games with no exclusive content on their platforms or any other platforms and Sony should go to Microsoft and ask for a deal to guarantee Call of Duty on their platform for the foreseeable future
According to Executive Vice President, Corporate Affairs and Chief Communications Officer of Activision Blizzard, Lulu Cheng Meservey has stated in her tweet, the deal been offered but Sony is the only one that has decided to not participate in the deal while Nintendo and Valve has happily taken a 10-year deal to have Call of Duty on their respective platforms
Gabe Newell, the founder and President of Steam, has gone as far to say in a statement to Kotaku
We’re happy that Microsoft wants to continue using Steam to reach customers with Call of Duty when their Activision acquisition closes. Microsoft has been on Steam for a long time and we take it as a signal that they are happy with gamers reception to that and the work we are doing. Our job is to keep building valuable features for not only Microsoft but all Steam customers and partners.
Microsoft offered and even sent us a draft agreement for a long-term Call of Duty commitment but it wasn’t necessary for us because a) we’re not believers in requiring any partner to have an agreement that locks them to shipping games on Steam into the distant future b) Phil and the games team at Microsoft have always followed through on what they told us they would do so we trust their intentions and c) we think Microsoft has all the motivation they need to be on the platforms and devices where Call of Duty customers want to be.
So, it seems like Gabe Newell have preferred to not even take a black and white deal with Microsoft as he believes that Microsoft will have Call of Duty on steam, along with multiple Xbox titles like Redfall and Starfield, to name a few, on Valve’s online store Steam.
Which is not surprising as Microsoft will be crazy to not allow Call of Duty on other platforms as that game will make the most money if it’s on more platform than just one.
What is the next step for Activision and Microsoft?
With both Microsoft and Activision all for the acquisition and them having the support of Nintendo, Valve for this acquisition and Ubisoft, Riot Games and Bandai Namco stating back in August during the Brazil filing, that there’s still more competition outside of Activision Blizzard, it seems like they just have to fight the FTC in court about this and just put out all the facts
But with this case going in front of a judge, you can expect Sony to come in support of the FTC’s decision, but this might not end well for all three parties as Activision, Xbox and PlayStation will have to reveal all their deals and such with all companies outside of the three parties.
If this does happen, you will be able to see what kind of deals Sony has made to keep games like Final Fantasy out of Xbox and deals that Xbox has made to do the same and this will only look to harm the relation they have with their partners
Sony and Microsoft will also be questioned about PS+ and Xbox Game Pass and why one offers day one while the other doesn’t and what deals were made for them, which will affect the brands and their relationship with their partners
Lastly, I wholly do expect Activision, Ubisoft, Valve, EA and Nintendo to come in and state that there’s more competition to Call of Duty, citing games like Battlefield and Fortnite.
Will the acquisition go through?
Simple answer? Yes
Long answer? I see no way that this deal doesn’t go through with so many companies and industry professionals seeing no problem with this deal as Sony has bought multiple developers in the time of this merger’s announcement by Microsoft and Activision Blizzard, which includes Lasengle (gaming division of DelightWorks), Haven Studios, Bungie & Savage Game Studios.
While yes, all of those are smaller developers (except for Bungie), they are still developers that Sony has bought and had them start making exclusive games for the PlayStation consoles, outside of the fact that Sony makes deals with third party developers to make exclusive games for PlayStation consoles.
Final Thoughts
Sony is a market leader in this industry, and they have developers like Bungie that has some of the top games in the market right now with Destiny 2, Ghost of Tsushima and God of War.
Microsoft has never led the market as their game portfolio, as good as they are, could not match the output and scale of Sony and their exclusives.
With Microsoft being an American company, they had also yet to capture the audience in Asia, a region that PlayStation and Nintendo have dominated for decades.
The merger of Activision Blizzard and Microsoft is a must for Xbox and the future of Game Pass and Phil Spencer certainly knows that and with the future of Xbox and all its services at stake, I know that Microsoft will fight tooth and nail to make this merger happen and it seems like FTC and CMA are just speed bumps for Microsoft right now
