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Sony won't budge on Microsoft-Activision merger objection

Ten-year deal to put Call of Duty on PlayStation shot down

Microsoft has once again proposed a ten-year licensing deal with Sony to appease British watchdog concerns over the Windows giant's proposed $69 billion takeover of Activision Blizzard – but the PlayStation maker isn't having any of it.

In a document [PDF] published by the UK's Competition and Markets Authority (CMA), Microsoft trotted out arguments it has already made to justify the purchase in the US and EU – namely that it would actually be beneficial to fans by making its games more accessible and more affordable. 

Microsoft also told the CMA, in its response to the regulator's February remedies notice, that it had previously proposed a package of remedies with Sony that would ensure its popular Call of Duty title was licensed for release on PlayStation for ten years.

"Microsoft believes that the criteria for the CMA to consider behavioral remedies are met in this case," the software behemoth pleaded in its statement.

In its own response [PDF] to the remedies notice and Microsoft's proposal, Sony argued that the proposed deal did nothing to ensure fair competition.

"[Sony Interactive Entertainment] is extremely sceptical that an agreement with Microsoft could be reached, much less monitored and enforced effectively," Sony declared.

The PlayStation maker said it believed that Microsoft could violate the spirit of such an agreement by throttling service to PlayStation customers, or raising the prices of Microsoft games on platforms or streaming services it doesn't control. 

Sony also cited Microsoft's "history of non-compliance with behavioral commitments" as reason not to allow its purchase of Activision Blizzard, and recommended to the CMA that the merger be blocked – or subjected to a structural remedy instead of a behavioral one.

In response to questions about Sony's willingness to agree to the deal, a Microsoft spokesperson reiterated the company line that the merger – and Sony's acquiescence – would be good for consumers and the market.

"The decision now lies with the CMA on whether it will block this deal and protect Sony, the dominant market leader, or consider solutions that make more games available to more players," the Microsoft spokesperson told us.

Everyone's a bit guilty of being exclusive

The CMA kicked off its investigation into the Microsoft-Activision merger last July. By September it seemed pretty convinced that the buyout would harm gamers – by putting the maker of one gaming platform in control over the maker of popular cross-platform games like CoD and World of Warcraft.

Last month the CMA concluded that the merger would, in fact, limit gamer choices and potentially lead to higher prices, and issued the remedies notice to propose ways in which Microsoft could convince it otherwise.

In an attempt to ease concerns, Microsoft president Brad Smith spent time last month jet-setting around Europe trying to convince the EU and UK governments that it was willing to do whatever it took to get the OK for the merger. The Xbox maker announced deals with Nvidia and Nintendo to share titles between the various platforms, like the GeForce Now and Switch, once the merger is complete – similar to its proposed deal with Sony.

The EU was reportedly happy with Microsoft's concessions, but Sony is still trying to block the marriage in the UK and the US, where the Federal Trade Commission has also sued to block the merger.

Smith, who has called any move to limit Call of Duty from PlayStation consoles economically irrational, has reportedly been trying to get Sony to sign the ten-year deal since December. He has even allegedly taken to carrying the contract with him in case he runs into a Sony executive who has had a change of heart.

Based on its response to Microsoft sent to the CMA, Sony isn't likely to have a change of heart. So Microsoft is still one-for-three on even getting a "maybe" out of regulators. 

The CMA's deadline to issue its final report is April 26. In the US, the matter is currently in court, where a judge recently sided [PDF] with Microsoft to force Sony to hand over internal documents pertaining to exclusivity deals – including ones to keep games off of Xbox Game Pass – as part of discovery in the case. ®

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