The FTC Commissioners and EU Commission Objections to Microsoft’s Xbox One-Playing Game with NetEase and Diablo Immortal
Next year will bring the most robust Call of Duty live operations to date, and even more engaging free-to-play experiences across platforms, as well as the next full premium release in the blockbuster annual series.
In its earnings report, the company said that it may not be possible to negotiate a new deal to license several games in China with a third party. The agreements, which contributed “approximately” 3 percent of its consolidated net revenues in 2021, expire in January 2023, the company said. “We are in discussions regarding the renewal of these agreements, but a mutually-satisfactory deal may not be reached.” Its co-development and publishing deal for Diablo Immortal with NetEase is unaffected, as it’s covered by a separate agreement.
The vote from the FTC commissioners today means Microsoft now faces significant hurdles to getting its Activision Blizzard deal complete. Regulators in the UK and EU are also scrutinizing the deal closely, despite Microsoft’s repeated attempts to appease regulators.
The FTC filed a lawsuit against the Microsoft transaction, which was one of the largest tech acquisitions in history.
“The acquisition of a single game by the third-place console manufacturer cannot upend a highly competitive industry. That is particularly so when the manufacturer has made clear it will not withhold the game,” Microsoft said in Thursday’s filing.
In an email sent to employees and provided to CNN, Activision CEO Bobby Kotick said the FTC suit may sound “alarming” but he remains confident the deal will close. “The allegation that this deal is anti-competitive doesn’t align with the facts, and we believe we’ll win this challenge,” he said.
The outcome of today’s meeting and the EU’s decisions in the coming weeks will undoubtedly shape whether Microsoft will head to court to defend its deal in Europe and beyond.
The European Commission will now need to decide how it handles objections to Microsoft’s deal. It reportedly sent its statement of objections to Microsoft earlier this month, issuing a formal antitrust warning against the software giant. There is concern around the cloud competition and game exclusivity that Europeans have not publicly objected to, so watchers are waiting to see if the EU publishes those objections.
Brad Smith, Microsoft President, said in December that the company was interested in signing a legally binding consent decree with the FTC and providing “Call of Duty” games to rivals for a decade.
Frank X. Shaw is the corporate vice president of communications for the company.
It wouldn’t be surprising if Game Pass is entirely separate: in 2021, Microsoft gaming boss Phil Spencer made it clear that studio acquisitions like Bethesda were about securing exclusive games for Game Pass.
According to a complaint filed by the FTC in December, it was worried that some popular games might stop being offered on devices that compete with Microsoft’s Xbox. The judge will hear the hearing in August.
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The Biden administration is taking an aggressive approach to antitrust enforcement. The US Department of Justice recently stopped a $2.2 billion merger of Penguin Random House, the world’s largest book publisher, and smaller US rival Simon & Schuster.
Microsoft has confirmed the Starfield game will be exclusive, but it is not known if the other games are named.
There is nothing sensible about our transaction being prevented from closing. There are no barriers to entry in our industry. We have seen more and more devices that allow people to play games with a variety of options. The tools and engines are open to developers of all sizes. The variety of game distribution options has never been greater. The merits of the case are what we believe we will prevail on.
Even with confidence in our case, we remain committed to creative solutions with regulators that will protect competition, consumers, and workers in the tech sector. As we’ve learned from our lawsuits in the past, the door never closes on the opportunity to find an agreement that can benefit everyone.
Even though Microsoft wants the FTC to prove it is obvious, I don’t believe it has more obscure details like the budgets for Call of Duty studios.
As well as Call of Duty, Smith’s tweet alludes to “Xbox games” more generally, though it doesn’t offer specifics on what franchises these may come from.
As Microsoft prepares to plead its case to EU regulators today, there is news of the deal. The closed hearing is expected to be attended by representatives from Microsoft including Brad Smith and Xbox head Phil Spencer, as well as Activision CEO Bobby Kotick, and Sony’s Jim Ryan. Representatives from Google, Nvidia, Valve, Electronic Arts, the European Games Developer Federation, and over half a dozen different national competition watchdogs are also expected to take part, per Reuters.
Smith said that they were more than willing to address the concerns that others have, whether it’s by contracts, or regulatory undertakings.
While the CMA is open to behavioral remedies that could involve deals for Call of Duty, it seems to favor structural ones — including a suggestion that involves a partial divestiture of Activision Blizzard in the form of selling off the Call of Duty business. In this meeting, the European Commission’s main concerns and any remedies Microsoft may need to consider will be highlighted.
GeForce Now: Breaking the Cloud Gaming Cycle / Microsoft Active Interaction Blizzard Gamers Association / Managing the Microsoft Store
What does that mean for gamers like you and me? Phil is the VP of GeForce Now and he gave me a big- picture answer and shorter-term practical details to go with it.
The big picture is that this deal will break the cloud gaming cycle by providing enough games to get enough people to pay for them and convince publishers to provide more games.
The company does not sell games. Unless they’re free to play, you have to buy them from Steam, the Epic Games Store, and / or the Microsoft Store for now — and possibly Battle.net in the future should the Activision Blizzard deal go through. “That’s how GeForce Now works,” he says. We can show them to authorized owners.
Even though Microsoft has its own Xbox Cloud Gaming service, GeForce Now may soon become the place to play Xbox games that live in the cloud. He is hoping that following a deal of this magnitude, the amount of titles on GeForce Now could go up to more than 20,000.
Sound neat? Just remember that we’re just talking about streaming rights for games that you’ve already purchased and games that are free to play — and even then, you shouldn’t expect to have access to every Microsoft game right away.
According to Eisler, Nvidia will only roll out a few games a week. He suggests that the company can only do 10 games per week. He estimates it will take between 6 and 12 months for the Microsoft Store to beenabled and for all existing games to be compatible with it.
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That’s just an estimate, by the way. The companieshaven’t worked on detailed implementation plans yet after the deal came together last week.
“We’re really down to one principal company that is objecting to this deal, and that’s Sony, and we’ve made clear that we’re happy to enter a 10-year agreement with Sony and we’re prepared to enter regulatory obligations as well, whether it’s London or Brussels or Washington,” Smith said. We would have a duty under the law.