BRUSSELS, Feb 22 (Reuters) – Microsoft (MSFT.O) has slammed antitrust criticism, saying on Tuesday it was willing to license deals to competitors in exchange for regulatory approval of its $69 billion deal to buy video game publisher Activision (ATVI.O) but didn’t want to sell its lucrative Call of Duty franchise.
WHAT IS THE ACTIVISION DEAL?
Microsoft announced Activision’s biggest offering ever in January last year to increase its clout in the booming video game market and rival market leaders Tencent (0700.HK) and Sony (6758.T) and laid the foundation for its investment in Metaverse to create digital spaces that are made more lifelike through the use of virtual reality (VR) or augmented reality (AR).
WHAT DOES THE CARTEL SUPERVISORY SAY?
In December, the US Federal Trade Commission (FTC) asked a judge to block the deal because it would give Microsoft’s Xbox exclusive access to Activision games and omit Sony’s Playstation and Nintendo consoles.
UK competition authority CMA has proposed selling Call of Duty to address its concerns, while the European Commission has warned Microsoft about the potential anti-competitive effects of the deal.
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WHO ARE THE DEAL’S CRITICS AND FANS?
Market leader Sony wants to block the deal. A group of 10 players in the United States have filed a private consumer antitrust lawsuit over the deal.
The European Games Development Federation with more than 2,500 game studios in 22 European countries and the UNI Global Union support the takeover.
WHAT DID MICROSOFT PRESIDENT SAID AND OFFER?
Microsoft President Brad Smith said he doesn’t think “it’s feasible or realistic to think that one game or part of this company (Activision) can be cut out and separated from the rest” and that he doesn’t see “a workable way, Selling the Activision studio to someone else for the quality of the game.”
Smith said the CMA has a choice of either exiting the deal and consolidating Sony’s 80% market share in Europe, or clarifying it with rules of conduct like the licensing deals with Nintendo and Nvidia that will bring Call of Duty to an additional 150 million people.
WHAT ARE THE NINTENDO AND NVIDIA LICENSING OFFERS?
Both companies have signed 10-year licensing deals that will bring Call of Duty to their gaming platforms, but these are pending approval of the Activision deal.
WILL MICROSOFT’S TACTICS WORK?
Do’s and don’ts like licensing deals are a tough sell for the CMA, which flexed its muscles in 2021 when it ordered Facebook owner Meta to sell animation image platform Giphy after the deal closed.
The European Commission might be more receptive to such remedial action if it can allay its concerns, but it’s too early to say.
WHO HAS GAVE THE GREEN LIGHT SO FAR?
Brazil, Chile, Serbia and Saudi Arabia gave their full approval.
WHAT NEXT?
The EU antitrust authority’s decision is due by April 11, but the deadline may be extended depending on when remedies are offered.
The CMA has given Microsoft until 17:00 GMT on February 22 to comment on possible remedial actions, with a response hearing open until early March, final submissions and responses in March and April 26 for a final report.
Microsoft’s Smith said the company will fight the FTC’s request to block the deal.
Reporting by Foo Yun Chee; Editing by Aurora Ellis
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