Microsoft and Activision Respond to FTC's Attempt to Block Acquisition - News
by William D'Angelo , posted on 23 December 2022 / 14,426 Views
The US Federal Trade Commission (FTC) earlier this month announced it has sued to block Microsoft's acquisition of Activision Blizzard claiming the deal would give Microsoft the ability to suppress its competitors in gaming.
Microsoft and Activision have now released their responses to FTC's attempt at blocking the acquisition.
"The acquisition of a single game by the third-place console manufacturer cannot upend a highly competitive industry," reads Microsoft's response. "That is particularly so when the manufacturer has made clear it will not withhold the game.
"The fact that Xbox’s dominant competitor has thus far refused to accept Xbox’s proposal does not justify blocking a transaction that will benefit consumers. Giving consumers high-quality content in more ways and at lower prices is what the antitrust laws are supposed to promote, not prevent."
The FTC in its report to block the deal pointed to Microsoft's record of acquiring and using gaming content to suppress content from rival consoles, including its acquisition of the parent company of Bethesda Softworks, ZeniMax Media.
Microsoft in its response to this stated, "The Complaint’s reference to Microsoft’s recent acquisition of ZeniMax—a set of gaming studios acquired in 2020—has no relevance to the current transaction. After that transaction closed, ZeniMax’s first two new games were made exclusive to PlayStation for one year postlaunch. Xbox anticipates that three future titles [redacted] all of which are designed to be played primarily alone or in small groups—will be exclusive to Xbox and PCs.
"But consistent with its historic approach, Xbox has continued to release new updates of existing ZeniMax games such as Fallout 76 and Elder Scrolls Online on both Xbox and PlayStation, because these games are designed to be played together by broad communities of gamers on different platforms. This last set of games is the one most analogous to Call of Duty. So the ZeniMax experience cuts against the idea that Xbox would make that game exclusive.
"And it is not just the ZeniMax games where Xbox has taken this approach; Xbox has also expanded (not contracted) access to Minecraft, a similar multiplayer game with a large existing community of gamers who play together from different platforms, since it was acquired. If there were any remaining doubt, Xbox’s offer to put Call of Duty on other platforms on commercially favorable terms for those platforms should eliminate it.
"Any suggestion that Microsoft’s statements to the European Commission about ZeniMax were misleading is incorrect. Microsoft explicitly said it would honor Sony’s existing exclusivity rights and approach exclusivity for future game titles on a case-by-case basis, which is exactly what it has done.
"The European Commission agrees it was not misled, stating publicly the day after the Complaint that Microsoft did not make any 'commitments' to the European Commission, nor did the European Commission 'rely on any statements made by Microsoft about the future distribution strategy concerning ZeniMax’s games.' Instead, the European Commission cleared the transaction 'unconditionally as it concluded that the transaction would not raise competition concerns.'
"Lastly, the gaming subscription service and cloud gaming service Xbox offers are not different products. The services allow consumers to access games in different ways, whether by paying a low monthly price for a broad catalog of games or playing a game on a variety of devices without first downloading it. But the games themselves are identical. Xbox believes these alternative payment and distribution models may have promise in the future. But consumers will ultimately decide whether Xbox is correct.
"If they agree with Xbox’s vision, that will simply prompt more competition, including from companies like Sony, which already has a successful subscription service without even including its most popular (and exclusive) games on the day they are released. Sony may prefer to protect the revenues it gets from more expensive individual game sales, but the antitrust laws do not serve to insulate the dominant market player and its favored business model from competition.
"Ultimately, the Commission cannot meet its burden of showing that the transaction would leave consumers worse off, because the transaction will allow consumers to play Activision’s games on new platforms and access them in new and more affordable ways. The relief sought in the Complaint should be denied."
Activision in its own response stated, "The FTC ignores the significant benefits of the Transaction in favor of a warped attempt to ignore the facts and rewrite antitrust law and settled precedent to protect Xbox's competitors from hypothetical harm that has no basis in marketplace realities.
"Adding Activision's content to multigame subscription and cloud gaming, where it would not have been available otherwise, is plainly output enhancing and gives garners more options on how and where to engage with Activision content. Activision, and particularly its King division, will also enable the acceleration of Xbox's nearly non-existent mobile gaming business, which would enhance competition in the fastest growing segment of gaming.
"And the Transaction will ultimately expand the capital support and talent available to Activision's game development studios, driving further innovation in new games and technologies.
"The FTC's disregard for these benefits to consumers and focus on supposed harms to Xbox's deep-pocketed competitors betrays a fundamental disconnect between the FTC's theories and the antitrust laws' underlying purpose, which is to protect competition, not competitors.
"The FTC is asking this Court to protect the world's largest gaming companies from further competition from Xbox, and thereby turning antitrust on its head. Blinded by ideological skepticism of high value technology deals and by complaints from competitors, the FTC has not only lost sight of the realities of the intensely competitive gaming industry, but also the guiding principles of our nation's antitrust laws."
There was a report that Microsoft offered Sony the right to add Call of Duty to its PlayStation Plus subscription service if its deal to acquire Activision Blizzard is approved. This offer would be in addition to the guarantee that Microsoft will release Call of Duty games on PlayStation, Nintendo, and Steam for the next 10 years.
Microsoft earlier this month announced Microsoft has entered a 10-year commitment with Nintendo to bring Call of Duty to Nintendo platforms if Microsoft's Activision Blizzard acquisition is approved.
The company offered the same deal to Valve to guarantee the series on Steam, however, Valve President Gabe Newell says he did not sign Microsoft's long-term Call of Duty commitment has he trusts their intentions.
Microsoft's acquisition of Activision Blizzard has so far been approved in Brazil, Saudi Arabia, and Serbia unconditionally.
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can contact the author on Twitter @TrunksWD.
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FTC is an embassesment. Wasting energy on something that isnt even a monopoly. They literally sound like fanboys.
Very good responses by MS and ABK here, they pretty much nailed all of the points that I myself would have made.
Did they try this hard to stop Disney? I mean, Disney are actually pretty monopolistic. This acquisition will probably just leave Microsoft as the 3rd biggest gaming company. Considering they're already 3rd behind Sony and Nintendo... nothing would really even change.
The ftc is under different leadership. Trying harder than they did with disney is a good thing and that shouldn't have gone through as easily as it did. Considering Disney had to finance that purchase and incurred a lot of debt while microsoft still have the money to make a purchase just as huge this is worse however. the purpose is to draw a line on the sand and make it clear to microsoft that they can't purchase the gaming industry with their incomparable cash reserve. Even if it does go through. Lina Khan saw that as the inevitable path big tech was taking into gaming and is having none of it.
You can see how Microsoft does the maths
X million PS players lose access to a game franchise they have played for decades
X million + 1 new subscribers to Xbox Gamepass
conclusion - customers benefit....at least in Microsofts Eyes. In reality X million don't. Microsoft should be banned from making any of these existing franchises console exclusive. Not just cod, but future Diablo's too. Other games on other platforms should be protected too - such as games on Mac.
Care to explain a bit more in detail?. I mean xbox so bad but yet Fallout 76 is added to Ps+ this month. So who doesnt benefit? the pc players who have to now wait for Spiderman 2??, And where is the xbox version of ff7? why does pc players have to wait for FF16?..
The most standout difference between Sony and Microsoft is when it comes to the studios, Microsoft has spent (assuming ABK is approved) around $80 billion buying them. Sony has spent probably $5billion max. Sony tends to nurture and develop studios, Microsoft has a few long standing ones but the majority are bought. I'm not against buying things but what I do object to is buying something to take it away from one group or putting it behind a paywall (gamepass) and saying "everyone benefits". They don't. It happens everywhere - film, tv, music etc but that doesn't make it right.
re the games mentions
Fallout 76 - release before it was bought by Microsoft. Surprised I admit that its on PS+ but its one of those games which will make very little from retail and a great deal more from inapp purchases so that kind of fits with how the market is moving (unfortunately).
FF series - that's a corporate decision by SE. They own and sell the game and choose which platform to sell it on. I'm not aware of the details of the deal but SE made a corporate decision on where and when to release their games.
Spiderman - license owned by Sony, game made by Sony, released when Sony wants on their platforms.
I wonder if Sony fans would be happy if Ms was the ones who got Spiderman and made it exclusive after spiderman games being multiplat for so long. I bet they wouldnt and they also wouldnt care if it was an MS studio that made it as they would say the IP should be multiplat and that should of been part of the deal and Ms is taking the IP away from other consoles. And you know what they would be right in saying that. Spiderman has always been a multiplat IP it doesnt matter what studio is making it it should still have been multiplat if a studio wanted to work on it. Also all them Sony money hats bring in more IP's every year than Ms buying activision who at the moment works on like 4 games and only one of them release yearly. I dont know why people seem to keep bringing up cost as if thats the end all be all. I am sure the is many xbox fans that would like to see FF7, FF16 Silent Hill 2 remake, Kotor remake instead of CoD. and thats just one years money hats from Sony. How many more will they do next year?. Remember over the years all them IP's add up.
This is getting more ridiculous by the day. -_-
Activision chose violence that is for sure
This article misses the BIG point, which Destin observed: Microsoft described the three ZeniMax exclusive games (presumably Starfield, Redfall, and either Elder Scrolls VI or Indiana Jones as the third) as TIMED exclusives in their submission! It sounds like Microsoft may double-dip; get the benefit of having them exclusive for a time, and have the benefit of subscription exclusivity in Game Pass, but do what Sony does with their exclusive games by releasing them later on PC. In this case the later release would be on PlayStation and/or Nintendo, though. This is HUGE news!
Right, but that's not what I said. I said they're suggesting the exclusivity to Microsoft platforms for the three games is a timed exclusive, suggesting a PS or Nintendo release may follow later.
Given your comment is +9 and my comment is -5, I think I failed to make my point. Either that, or people aren't stoked at the possibility of Starfield, Redall, etc., eventually coming to PS.
I think you're misinterpreting it a little or not taking into account the vagueness of lawyers to cover their asses on all basis.
The segment on the 3 exclusive titles only states...
"Xbox anticipates that three future titles— all of which are designed to be played primarily alone or in small groups—will be exclusive to Xbox and PCs."
They don't specifically refer to those 3 exclusives as timed in that segment.
They in a later sentence state this paragraph but as a rebuttal to something that FTC claimed Microsoft did, it's a counter to a part of FTC's argument and a comment on Zenimax's overall approach, not specific to any one title.
"Microsoft admits that it acquired ZeniMax, the parent company of a game developer; that following its acquisition of ZeniMax, all released ZeniMax titles have been available on PlayStation, including two ZeniMax titles that were exclusive to PlayStation upon release as well as new updates of Elder Scrolls Online; and that some future ZeniMax games may be exclusive to Xbox and PC when they are initially released"
Now, I think Microsoft is being very cautious here with the wording.
They don't specifically state that this relates to the 3 exclusives.
They only say that "some" "may be" exclusive on initial release, it leaves room for them to do either/or, some may be timed exclusive, some may be lifetime exclusive.
It does sound like admitting of timed exclusivity but I don't think it's clear cut enough, "initially released" still remains true even if they stay lifetime exclusive.
To me, it sounds like very careful lawyer speak, wordings which can be interpreted multiple ways, it gives them room to do either/or and so that nobody (regulatory bodies) can accuse them of lying, they could do timed exclusives, they could do lifetime exclusives, they could do a mix of both, either way, they leave it open to interpretation and not a lie.
I will say that I think the Zenimax MMO (New IP) will be multiplatform (but maybe it could be timed exclusive at first?) but I wouldn't hold your breath at Starfield, Redfall ever releasing on PlayStation, I think it's 50/50 if Indiana Jones is multiplatform/exclusive.
You can't play nice with incessant liars & power hungry frauds. They have to be confronted and fought.
Nice guy attitude got Xbox nowhere.
The good thing now is that even if this deal doesn't get blocked, I can't see see microsoft ever taking call of duty off playstation, like ever.
Me either. And I don't think they ever intended to. Hell, in this same document Microsoft refers to the exclusivity for Bethesda's single-player titles being timed exclusivity. VGChartz missed that in their summary, but it's there if you go read the document for yourself.
Destroy sony. Gamepass is the future of gaming.
While I def. believe GamePass is the future of gaming, I don’t think this is (and should be) about destroying Sony :) You need competitors to get better.
The future for peasants
cringe
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