Yesterday the unconditional clearance of Microsoft's purchase of Activision Blizzard King by Brazil's competition authority became final, but that was not the only positive development relating to MSFT-ATVI (those are the two companies' stock ticker symbols):
The Information Technology & Innovation Foundation (ITIF), a major nonpartisan U.S. technology policy think tank, published an analysis of the foreclosure concerns raised by Sony with various antitrust enforcers around the world, particularly with the United Kingdom's Competition & Markets Authority (CMA). The TL;DR version is that
making titles exclusive to Microsoft's Xbox gaming console would make sense only with respect to "less valuable game titles" than Call of Duty,
as the opportunity cost by making a blockbuster hit like Call of Duty unavailable or unattractive on the PlayStation would far exceed whatever Microsoft could gain on the console side of the business, and
if the past is any indication, it's not in Microsoft's DNA to do that: Minecraft serves as an example, and it actually needed much less time to reach a given level of monthly active users than CoD.
I recommend reading the ITIF article I just linked to. While Microsoft is one of numerous supporters, so is at least one company that is not in favor of Microsoft-ActivisionBlizzard: Google parent Alphabet. ITIF has a very broad-based membership, and its Honorary Co-Chairs are two Democratic and two Republican politicians (Senator Chris Coons (D-Del.), Senator Todd Young (R-Ind.), Congresswoman Suzan DelBene (D-Wash.), Congressman Darrell Issa (R-Cal.)). ITIF is not a radical libertarian "antitrust be damned" group, nor is it even remotely comparable to CCIA, the "Cash & Carry" Industry Association: unlike CCIA, ITIF is about building a technology policy consensus on issues that are of interest to the industry at large, as opposed to helping some Big Tech companies against others.
While there are exceptions like Toyota and Infineon, ITIF is overwhelmingly an American organization. Post-Brexit, the unique relationship between the UK and the United States is more important than ever, especially in times of crisis and turmoil. But the most important part is that ITIF explains very well why Sony's CoD-related argument is not a reason to block the transaction.
The CMA's Phase 1 decision was not only about the possibility of vertical foreclosure affecting the PlayStation, of course. As far as game streaming is concerned, it's a dynamic market that Netflix appears to be preparing to enter. As Microsoft told the CMA, players still normally want to install their games locally.
The problems that app makers large and small face because of Apple's and Google's walled gardens are getting worse. Earlier today I wrote about several restrictive and taxative changes Apple has made to its app review guidelines, all of which would best be addressed by enabling the existence of competing app stores that can overcome the Poower of Default. Opening up mobile app distribution is what competition enforcers should be primarily concerned about, and Microsoft needs mobile games like Candy Crush to make its contribution to competition in that space. Apart from the fact that Sony will remain the gaming console market leader anyway, we're talking about a single-purpose niche product, unlike smartphones.
While Sony has reportedly postponed its next major Showcase (or State of Play) event only because it knows that its awe-inspiring array of exclusive content would strengthen Microsoft's case for clearance of its Activision Blizzard King acquisition, Sony can't hide its content strategy. I just saw a Reuters article about Microsoft having to catch up in China because Sony controls a major Chinese game hit, and game maker Hideo Kojima tweeted a photo yesterday that shows him with Sony's PlayStation chief Jim Ryan:
With Jim Ryan 👍😍 pic.twitter.com/zMG3YchNsV
— HIDEO_KOJIMA (@HIDEO_KOJIMA_EN) October 24, 2022
So much for vertical foreclosure.
