Regulators and rivals all around the world have been fretting over Microsoft’s bid to buy Activision Blizzard, the maker of titles such as Call of Duty, World of Warcraft, Overwatch, and the mobile game Candy Crush. They worry the software giant will get control of key games and make them exclusive to its own Xbox console. But Microsoft CEO Satya Nadella said that goes against Microsoft’s own ethos—its own products run everywhere.
In a 45-minute appearance in federal court in San Francisco yesterday (June 28), Nadella sought to dispel antitrust concerns, saying that making Activision games exclusive would make “no economic sense and no strategic sense.”
Microsoft wants to buy the company to better compete with large publishers like Tencent, Nintendo, and Sony. But it knows that exclusivity won’t be the way to maximize earnings. “I grew up in a company that always believed that software should run on as many platforms as possible,” Nadella said.
Closing arguments in the case will be heard today (June 29) and a decision could come as soon as Monday (July 3).
🌐 Internet Explorer, launched in 1995 as part of an “Internet Jumpstart Kit” and retired in 2022, was king after the Netscape era and before the Google Chrome and Mozilla Firefox became dominant players. It came bundled with every Windows device.
💻 Microsoft 365, which includes Word, Excel, Outlook, and more, can be downloaded on any device. In contrast, Apple’s Pages, Numbers, and Keynote apps only work on other PCs on the cloud.
🎮 Microsoft’s Xbox Play Anywhere program, launched in 2016, allowed users to buy a game once and play it “anywhere”—meaning on both PCs and Xbox consoles. The 2019 Game Pass launch took that a notch further. These were moves within the Microsoft universe, but they speak to Microsoft’s claim of being platform-agnostic at least.
🤖 OpenAI CEO Sam Altman has said its partnership with Microsoft, which has funneled in tens of billions of dollars in the generative artificial intelligence (AI) business, is not an exclusive pact. OpenAI can build its own software products and services, in addition to licensing its technology to other companies.
💭 Not even Sony head Jim Ryan believes that the Activision buy was an “Xbox exclusivity play.”
Activision’s CEO Bobby Kotick, who testified before Nadella, also argued against exclusivity. According to Kotick, the blockbuster game has to exist across platforms, including consoles, mobile phones, and PCs. “You would have a revolt if you were to remove the game from one platform,” he said.
Kotick claimed that Call of Duty, which boasts over 100 million monthly active users, cannot be removed from Sony’s PlayStation without “very detrimental” consequences to Activision’s business. And data supports that claim: Almost 60% of physical sales of Call of Duty: Modern Warfare II during launch week in October 2022 were on PlayStation platforms, and the remaining 40% came from the PC and Xbox versions combined.
Microsoft already offered to license the popular franchise to rivals—Nintendo signed a 10-year deal, while Sony has so far rejected the offer—but the FTC is not convinced this openness will last.
“If it was up to me, I would love to get rid of the entire sort of exclusives on consoles, but that’s not up to me to define,” Nadella said. “I have no love for that world.”—Microsoft CEO Satya Nadella
January 2022: Microsoft decides to buy Activision Blizzard for $68.7 billion
July 2022: Britain’s Competition and Markets Authority (CMA) launches a probe
December 2022: The US Federal Trade Commission seeks to block the deal, alleging it would “harm competition in high-performance gaming consoles and subscription services by denying or degrading rivals’ access to its popular content”
February 2023: Microsoft receives a formal statement of objections from the European Commission at the start of the month. A week later, the UK’s CMA provisionally reports “competition concerns” about the merger, suggesting that Activision Blizzard would need to sell the Call of Duty part of its business first to win approval.
April 2023: UK antitrust regulator Competition and Markets Authority (CMA) blocks Microsoft’s Activision deal, claiming it would stunt innovation in the industry
May 2023: The European Commission approves the acquisition.
June 2023: Date by which Microsoft hoped to seal the deal. At the end of the month, the jury’s still out in both the US and the UK.