The video games industry has been witnessing a fierce battle for control, with Microsoft, the tech giant behind the Xbox console, facing opposition from British competition regulators and the US Federal Trade Commission (FTC) in its attempt to acquire Activision, the maker of the popular Call of Duty franchise. Recently released emails have shed light on Microsoft’s competitive strategy, with a senior executive claiming that the company could “spend Sony out of business.” In this article, we delve into the details of these revelations, Microsoft’s perspective on the takeover, and the implications for the video games market.
The ongoing battle between Microsoft and regulatory authorities over its proposed acquisition of Activision, the creator of the highly successful Call of Duty games, has intensified in recent weeks. The video games market has become a lucrative industry, attracting major players like Microsoft and Sony. However, Microsoft’s attempts to secure the takeover have faced resistance from both the British Competition and Markets Authority (CMA) and the FTC. Newly disclosed emails have provided insights into Microsoft’s competitive strategy and its ambitions to gain an upper hand over Sony.
Microsoft’s Competitive Strategy
Microsoft’s head of Xbox Games Studios, Matt Booty, expressed a desire to outspend Sony in a bid to dominate the video games market. In an email dating back to 2019, Booty urged Microsoft’s finance chief, Tim Stuart, to unleash billions of dollars in spending to put pressure on Sony. These comments, made prior to Microsoft’s bid for Activision, reveal the company’s aggressive approach to securing its position in the market.
Microsoft’s Perspective on the Takeover
Contrary to Sony’s claims that the Microsoft takeover would result in the exclusion of Call of Duty from their platform, Microsoft argues that it would have no incentive to make the game exclusive to the Xbox. The company aims to ensure that the game remains accessible to a wide range of players across different platforms. However, Microsoft expressed concerns about the dominance of other major players, such as Tencent, Google, Amazon, and even Sony, who could potentially become the “Disney of games” and own the most valuable content. It also sees Sony as the only other player capable of competing with Microsoft’s game streaming products.
Microsoft’s Response to the Newly Released Emails
Microsoft responded to the revelations by stating that the email in question is over three years old and predates the announcement of their acquisition by 25 months. The company argues that the email referred to industry trends that were not pursued and is unrelated to the current acquisition of Activision. Microsoft seeks to distance itself from the implications of the email and asserts that it does not reflect its current strategy or intentions.
Activision’s Criticism of the CMA’s Decision
Activision, the target of Microsoft’s acquisition, has strongly criticized the CMA’s decision to block the deal, claiming that it portrays Britain as “closed for business.” Bobby Kotick, Activision’s chief executive, has accused the CMA of being a “tool” of the FTC. The CMA, however, has denied these allegations and maintains that its decision is based on valid concerns regarding market competition.
Microsoft’s Attempted Acquisitions
Documents revealed as part of the ongoing legal battle in the US have shown that Microsoft had expressed interest in acquiring other game makers, such as Bungie and Sega. Bungie, known for developing games in the Destiny franchise, was later purchased by Sony in 2022 for $3.6 billion. These attempted acquisitions highlight Microsoft’s efforts to expand its reach and strengthen its position in the highly competitive gaming industry.
The battle between Microsoft and regulatory authorities over the proposed acquisition of Activision has brought to light the aggressive nature of the competition in the video games market. Microsoft’s ambition to “spend Sony out of business” underscores its determination to dominate the industry. However, Microsoft denies any intention to exclude Sony from accessing popular game franchises like Call of Duty. As the legal proceedings continue, the fate of the acquisition and the future of the video games market hang in the balance.
- What is the significance of the Microsoft takeover of Activision for the video games market? The Microsoft takeover of Activision has major implications for the video games market, potentially reshaping the industry’s landscape. It signifies the intense competition between major players like Microsoft and Sony, as well as concerns about market dominance and exclusivity.
- Why did Microsoft claim it could “spend Sony out of business”? In an email exchange, a Microsoft executive expressed the belief that Microsoft had the financial power to outspend Sony, thereby gaining a competitive advantage. However, Microsoft later clarified that the email referred to industry trends that were not pursued and were unrelated to the current acquisition.
- What are the concerns raised by the FTC and the CMA regarding the Microsoft takeover? The FTC and the CMA have raised concerns about potential anticompetitive effects resulting from the acquisition. They fear that it could lead to reduced competition in the video games market and limit consumer choice.
- Why did Activision criticize the CMA’s decision to block the Microsoft takeover? Activision has strongly criticized the CMA’s decision, arguing that it sends a negative message about Britain’s openness to business. Activision’s CEO, Bobby Kotick, has accused the CMA of being influenced by the FTC and acting as its “tool.”
- What other acquisitions did Microsoft attempt in the gaming industry? Documents revealed in the legal battle show that Microsoft expressed interest in acquiring other game makers, such as Bungie and Sega. However, these attempts were ultimately unsuccessful, with Bungie being bought by Sony in 2022.