Microsoft refutes Sony’s claims that its Activision acquisition is anti-competitive

Microsoft has responded to Sony‘s claims that its ongoing attempt to acquire Activision Blizzard would be anti-competitive, especially with regards to Call of Duty.

Last month Sony told Brazil’s regulatory body CADE – which like many regions, is currently studying the proposed deal for approval – that the deal could influence players to switch from PlayStation to Xbox.

At the time, it argued: “Call of Duty is so popular that it influences users’ choice of console, and its community of loyal users is entrenched enough that even if a competitor had the budget to develop a similar product, it would not be able to rival it.”

Now, in a 27-page document relating to the acquisition, Microsoft has replied to CADE, attempting to dismiss Sony’s claims.

In the report – transcribed by VGC –  Microsoft notes that while numerous third parties, including Ubisoft and Bandai Namco, gave responses to CADE, Sony was the only company that claimed Call of Duty was in a genre of its own with no competition.

“Only one third party, Sony, presented materially different opinions than the Applicants and the other third parties consulted by the SG,” Microsoft claims. “Sony is isolated in this understanding and, curiously, even contradicts itself in its response to the letter, as will be detailed below.”

Microsoft goes on to state that Sony doesn’t want to see Call of Duty games on Game Pass on day one, because it “is resentful of having to compete with Microsoft’s subscription service”.

“Sony’s public statements on subscription games and its response to the SG’s letter are clear,” the response reads. “Sony does not want attractive subscription services to threaten its dominance in the digital distribution market for console games.

Further reading

21

Microsoft claims it ‘simply wouldn’t be profitable’ to make Call of Duty Xbox exclusive

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“In other words, Sony rails against the introduction of new monetization models capable of challenging its business model.”

Microsoft also denies Sony’s claim that Call of Duty is a “category of games in itself”, despite the fact that it has a loyal following.

“Stating that Call of Duty has a loyal following is a premise from which does not follow from the conclusion that the game is a ‘gaming category per se’,” Microsoft claims.

“Sony’s own PlayStation, incidentally, has an established base of loyal brand players. Such a finding, however, does not lead to the conclusion that the PlayStation – or any branded product with loyal consumers – is a separate market from all other consoles.

“Extrapolating from such a finding to the extreme conclusion that Call of Duty is a ‘category of games per se’ is simply unjustifiable under any quantitative or qualitative analysis.”

It also lists five reasons arguing against Sony’s claim that the addition of Activision Blizzard games to Game Pass would lead to an unattainable lead in subscription services for Microsoft.

According to Microsoft, this claim is wrong because:

• It’s not part of Microsoft’s strategy to remove content from players, and COD will still be on PlayStation as a paid title
• Data shows that players see subscription services as only one way to pay for games
• Sony’s claim ignores the “dynamic nature” of subscription services, and the fact that Sony has its own too
• (Redacted information)
• There are numerous other game distribution channels and subscription services, many of which include content that isn’t available on Xbox

Microsoft also claims that arranging exclusivity deals has been at the heart of Sony’s strategy to strengthen its position in the games industry, and that as well as having its own first-party exclusives it also has exclusivity deals with third-party publishers.

It also alleges that Sony actively tries to hamper Game Pass’s growth by paying some developers for “blocking rights” in return for them agreeing not to add their content to Game Pass.

Finally, in perhaps the strongest indication yet that Call of Duty will remain multiplatform, Microsoft claims that not having CoD games on PlayStation wouldn’t make business sense, because it would only be profitable if enough people jumped over to Xbox to make up for the money lost from not selling PlayStation copies.

In its first response to Microsoft’s proposed acquisition of Activision Blizzard published in January, Sony said it expects Call of Duty games to remain multiplatform due to “contractual agreements”.

Further reading

178

Sony says it believes Xbox owning Call of Duty ‘could influence users’ console choice’

Regulatory docs reveal the PlayStation firm’s thoughts on the Activision Blizzard acquisition

Microsoft’s head of gaming also subsequently confirmed his intention to keep Call of Duty on PlayStation platforms once Microsoft’s acquisition of Activision Blizzard is completed.

However, it was later claimed that Activision Blizzard is contractually committed to releasing only the next three Call of Duty games for PlayStation consoles, including this year’s Modern Warfare 2.