In its full response (published today) to the UK Competition and Markets Authority (CMA)’s provisional findings from the Microsoft–Activision deal review, Sony has reiterated its desire for the acquisition to be blocked on account of Microsoft’s past behavior with acquisitions and the likelihood of the significant lessening of competition (SLC) scenarios outlined by the CMA. The Japanese gaming giant argues that Microsoft’s claims of maintaining existing properties’ multi-platform presence post-acquisition are not relevant to the current situation. Instead, Sony points towards Bethesda’s upcoming Starfield and Elder Scrolls titles, and states that Microsoft making these properties Xbox-exclusive post-acquisition is the better indicator of what it plans to do with Activision Blizzard’s IPs.

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The CMA’s provisional findings from its Phase 2 review of the Microsoft-Activision deal remain a major bone of contention between Microsoft and Sony a month into their release. To address the regulator’s concerns of anti-competitive behavior on its part, Microsoft has signed multiple access agreements with the likes of Nintendo, Nvidia, Boosteroid, and Ubitus to provide Activision Blizzard’s video game offerings (including Call of Duty) to these companies’ hardware and services. The Redmond corporation also made public the details of a similar offer to Sony itself, which the latter has not accepted.

In its own response to the CMA’s provisional findings, Sony has expressed support for the UK antitrust watchdog’s stance and has pointed to Microsoft’s behavior with Bethesda’s previously-multi-platform IPs after the ZeniMax acquisition as a direct indicator of its plans for Activision Blizzard’s games:

First, Microsoft argues that “its past business practices are consistent with its stated position” that it does not intend to remove Call of Duty from PlayStation (or degrade access to it). This is difficult to square with what has actually happened. The CMA “reviewed Microsoft’s strategy following its previous acquisitions” and found that Microsoft “typically makes games exclusive to Xbox”. Microsoft has never disputed this.

Microsoft is fond of arguing that, with its prior acquisitions, it did not make the existing, already released games it acquired exclusive to Xbox. But the foreclosure concern in this case is not about past releases of Call of Duty. It is about the impact of Microsoft making new Call of Duty releases (which are launched every year) exclusive, as it has done for the new releases of Starfield and Elder Scrolls following the acquisition of ZeniMax in 2021. As the PFs explain, these releases were announced in 2018 and were not expected at that time to be Xbox exclusives. It was only after acquiring ZeniMax that Microsoft’s Phil Spencer revealed that, all along, the deal had been about “delivering great exclusive games” for Xbox.

Second, Microsoft points to Minecraft as an example of an acquisition where it did not pursue exclusivity. But this example is not relevant to an exclusivity strategy regarding future releases of Call of Duty. Minecraft is a single release game that is already in users’ hands: unlike Call of Duty, there are no future releases of Minecraft. The CMA correctly points out that Minecraft’s “legacy monetisation model of a one-time fee for lifetime access and updates…differs significantly from Call of Duty, where users buy the new premium iteration of the game every year for a higher fee”. SIE therefore agrees with the PFs that the more relevant indicator of Microsoft’s intentions on exclusivity for Call of Duty is the ZeniMax deal.

Sony further argues that besides direct foreclosure strategies such as raising the price of Call of Duty titles on PlayStation or offering them on cloud gaming services for a “commercially unviable price” (claims Microsoft has shot down), it could also indirectly engage in foreclosing behavior such as by dedicating its best teams to the Call of Duty experience on Xbox hardware and services. In conclusion, it agrees with the CMA’s prediction of the deal’s consequent SLCs, and reiterates its belief that the deal should be blocked altogether.

Source: CMA (spotted by CharlieINTEL)