Microsoft takes big step in dismantling Sony's anti-merger arguments

Microsoft adds significant pressure against Sony and takes one big step forward in dismantling the anti-merger arguments that Sony has given regulators.

Microsoft takes big step in dismantling Sony's anti-merger arguments
2 minutes & 42 seconds read time

Microsoft throws a curve ball that directly counters many of Sony's anti-merger arguments.

Microsoft takes big step in dismantling Sony's anti-merger arguments 98

Last night, Phil Spencer announced surprise deals that Microsoft has offered two of its major competitors. If the Activision-Blizzard merger is approved, Spencer said, then Microsoft will bring Call of Duty to both Nintendo and Steam. The tech giant has offered both Nintendo and Valve a significant 10-year licensing deal for the $31 billion shooter franchise. Call of Duty hasn't been on Nintendo since 2013 when Ghosts released on Wii U.

"Microsoft has entered into a 10-year commitment to bring Call of Duty to Nintendo following the merger of Microsoft and Activision Blizzard King," Spencer said in a Tweet. 

"Microsoft is committed to helping bring more games to more people however they choose to play. I'm also pleased to confirm that Microsoft has committed to continue to offer Call of Duty simultaneously on Steam [and] Xbox after we have closed the merger with Activision Blizzard King."

This deal can't be ignored and is one of the single most important developments in the merger news cycle. Not only does Microsoft's deal significantly erode Sony's core anti-merger arguments, but it shows that Microsoft is content with completely breaking down any sort of walled garden and further evolving the Xbox ecosystem way behind traditional exclusivity and the walled garden approach that Sony has enjoyed during its long-reigning PlayStation 4 generation.

Some of Sony's now-outdated arguments stem from Microsoft aiming to foreclose (as in forcing other companies and platforms to shut down) its competitors by making Call of Duty exclusive to Xbox, thereby harming competitors and consumers. Microsoft has repeatedly said that this will not happen. Granted that the bulk of Sony's arguments have been published at a time before Microsoft had confirmed its new 10-year deals with Valve, Nintendo, and apparently Sony themselves.

Sony has taken three main points of the CMA's Issues Statement and Decision and used them to form arguments:

  • Theory of Harm 1: Input Foreclosure of Rival Gaming Platforms (Excluding MultiGame Subscription Services)
  • Theory of Harm 2: Input Foreclosure of Rival Multi-game Subscription Services
  • Theory of Harm 3: Foreclosure of Cloud-Gaming Service Providers Through Leveraging Microsoft's Ecosystem

In a response letter to the UK's Competition for Markets Authority, Microsoft made interesting statements that both Steam and Nintendo platforms have "prospered without access to Call of Duty."

This implies that neither Steam nor Nintendo need Call of Duty to be successful. This is true. Nintendo makes most of its game sales revenues from first-party titles, for example, and Steam's top-earning titles are often games like Counter-Strike.

Based on this, we can infer that Microsoft's proposed 10-year deals with Valve and Nintendo are primarily for Microsoft's benefit.

This works in two ways: One, and the most obvious, it gives Microsoft two separate monetization points for gaming's most lucrative shooter franchise; and two, it undermines Sony's argument. Microsoft can now say "We offered Valve, Nintendo, and Sony the same 10-year deal for Call of Duty. Do you believe we won't make Call of Duty exclusive now?"

At the same time, Valve and Nintendo both stand to benefit in a very meaningful way from Call of Duty by way of royalties, new players, and of course sign ups to premium subscriptions like Nintendo Switch Online, which is required for online play on Nintendo hardware.

PlayStation could still be affected by Microsoft's plans for Call of Duty, but not in the way that it has outlined in its CMA responses.

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Derek joined the TweakTown team in 2015 and has since reviewed and played 1000s of hours of new games. Derek is absorbed with the intersection of technology and gaming, and is always looking forward to new advancements. With over six years in games journalism under his belt, Derek aims to further engage the gaming sector while taking a peek under the tech that powers it. He hopes to one day explore the stars in No Man's Sky with the magic of VR.

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