$69b Activision deal totally helps gamers and saves them money, says Microsoft

Xbox maker responds to US regulator's lawsuit to block the acquisition

Microsoft has put forward its argument against the US trade regulator's attempt to block its massive purchase of games dev Activision Blizzard from going through, claiming the deal would be good for consumers.

"The acquisition of a single game [Call of Duty] by the third-place console manufacturer cannot upend a highly competitive industry," Microsoft claimed in its response [PDF] to the antitrust lawsuit filed by the US Federal Trade Commission (FTC) a fortnight ago.

The software giant went on to insist that it would make a "limited" portfolio of popular games more "accessible" to consumers as well as "making them more affordable."

It said it would make Call of Duty, Activision's wildly popular first-person shooter, more broadly available. Microsoft's Xbox division has since agreed to provide the game to Switch maker Nintendo (which doesn't currently have it) under a 10-year licensing deal and said in the filing it had offered the same to PlayStation maker Sony. As Microsoft notes in its filing, however, "Sony refuses to deal."

All Activision Blizzard games will be affected by the acquisition, which was announced in January this year, months after the troubled games maker was sued over an alleged "frat boy" toxic culture that, it is claimed, led to lower pay for female employees as well as discrimination and harassment. The suit's trial start date has been set for February 2023.

Games in Activision's portfolio include grandparents' fave Candy Crush Saga, World of Warcraft, StarCraft, Diablo, Hearthstone, Heroes of the Storm, Overwatch, Crash Bandicoot, Tony Hawk's skateboarding games, Spyro, Skylanders and Guitar Hero.

However, Call of Duty is the sticking point as it is by far its most popular game. According to Activision's own filings, it is played by "well over half a billion players." Sony earlier complained that Microsoft was essentially building itself a backdoor to making Call of Duty exclusive to Xbox and PC gamers. It also claimed Microsoft could use the game to unfairly promote its Xbox Game Pass streaming service.

Microsoft worked hard to dispel this idea, and just weeks ago was battling to fend off FTC scrutiny, with President Brad Smith writing an op ed in the Wall Street Journal saying gamers would get more options post-close. Days after, Smith reportedly traveled to the capital city to meet with FTC members to persuade them not to sue Microsoft over the deal.

Just hours after The Reg detailed its elaborate PR efforts, which included social media pledges from Microsoft gaming division boss Phil Spencer, the FTC suit landed.

Over in the UK, the deal has already been subject to scrutiny by the Competition and Markets Authority (CMA), which published views from the public on Wednesday as its investigation continues. It hasn't escaped anyone's notice that Microsoft is already dominant in PC operating systems, though apparently a majority of respondents thought the multiplayer nature of the game would preclude the Windows maker from limiting the game to its own console.

The CMA said in September it was concerned the merger could "harm rivals, including recent and future entrants into gaming, by refusing them access to Activision Blizzard games or providing access on much worse terms." It is also wary of "combining Activision Blizzard with Microsoft's broader ecosystem" – referring to Xbox Game Pass.

Microsoft has pitched the acquisition as an attempt to boost its mobile gaming fortunes, noting that Activision's mobile revenues are much greater than its consoles. The games maker's Q3 2022 showed mobile and ancillary revenues stood at $932 million for the quarter, 52 percent of the quarter's $1.782 billion in net revenues, with console topline at $366 million and PC at $363 million.

The complaint response this week said "Xbox wants to grow its presence in mobile gaming" and also said Xbox's "console lags well behind Sony's and Nintendo's."

For now. ®

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