According to Microsoft President Brad Smith, the Federal Trade Commission’s (FTC) reported plans to sue Microsoft over its merger with video game giant Activision “would be a huge mistake” and “would hurt competition, consumers, and thousands of game developers.”
In an op-ed in the Wall Street Journal, Smith set out to again explain Microsoft’s stand and objective for proposing the $69 billion merger with Activision, going into detail as to why the deal will be beneficial for gamers and the entire gaming market. In the article, Smith paints Microsoft as the real underdog in this fight — the exact opposite of what Sony is claiming.
“Microsoft faces huge challenges in the gaming industry,” Smith says. “Our Xbox remains in third place in console gaming, stuck behind Sony’s dominant PlayStation and the Nintendo Switch. We have no meaningful presence in the mobile game industry. That segment of gaming generates the most revenue and is the fastest-growing, but a significant portion of the revenue goes to Google and Apple through their app-store fees.”
According to Smith, the merger will benefit the industry as a whole because it will allow Microsoft to compete with Sony, which will lead to increased market competition (which regulators so dearly want), and it will allow Microsoft to better compete with Google and Apple, which are both indisputably dominating the mobile gaming market through their control of their own app stores.
Microsoft has long sought to become competitive in the mobile market, but Google and Apple have always found a way to block the software giant from doing so. The Competition and Markets Authority (CMA), the competition regulator in the U.K., admitted as much and has pushed for an investigation into the issue.
“Responses to the consultation, which have been published today, reveal substantial support for a fuller investigation into the way that Apple and Google dominate the mobile browser market and how Apple restricts cloud gaming through its App Store,” CMA explained in a press release regarding the matter. “Many of those [responses] came from browser vendors, web developers, and cloud gaming service providers who say that the status quo is harming their businesses, holding back innovation, and adding unnecessary costs.”
One more benefit to the merger, according to Smith: once the deal closes, Microsoft will be able to make Activision’s well-known games available on other platforms without charging any additional fees, which will help customers save more.
“Acquiring Activision Blizzard would enable Microsoft to compete against [Sony, Apple, Google] through innovation that would benefit consumers,” Smith explains. “While modern consumers can stream videos or music on multiple devices on low-cost subscription plans, many games can often only be individually purchased and downloaded onto one device. Microsoft wants to change that by offering consumers the option to subscribe to a cloud gaming service that lets them stream a variety of games on multiple devices for one reasonable fee. It would also benefit developers by allowing them to reach a much broader audience.”
