Wednesday, 17 May 2023 13:22

Microsoft CEO Hints that New Games Might not be Available in the UK While Claiming Pro Competition Stance

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Yesterday we talked about how the Microsoft Activision Blizzard deal had been approved by the European Commission (on antitrust) touting licensing deals that were pro competition. As we stated in that article, the licensing agreements only extend to cloud gaming services, they exclude consoles and other non-Microsoft controlled hardware. The EC and Microsoft are calling this very pro-competition even though cloud gaming represents around 1% of the market.

Still the UK CMA and the US FTC are not buying it. The UK has outright vetoed the acquisition and the FTC has filed a legal complaint that will be heard sometime in August. Microsoft and Activision are playing the part of hurt benefactor to the gaming industry with statements from people like Microsoft CEO Satya Nadella “This is the most pro-competitive thing I’ve ever seen. It is using in some sense a large company’s ability to persist and introduce more competition” and “The fundamental logic of this deal, bringing more competition and more opportunity for publishers and gamers still holds,”

The challenge here is that none of these statements explain how Microsoft holding aa majority share of game titles and IP is pro-competitive. The licensing deals that the EC, Microsoft, and Activision keep pointing to are only for ten years. This is a blink of an eye in the gaming industry. To give you perspective, 10 years is one, maybe two game development cycles. The deal also is ONLY for cloud streaming services, it does not include Sony PlayStation, Nintendo Switch or really any other competing platform. The likelihood of Microsoft deciding to exclude titles from these platforms should not be ignored.

To me, there is not really an upside to the entire gaming market. Considering Phill Spencer’s recent comments on how Microsoft cannot compete using normal means (good titles and hardware), it makes me think that this move is the beginning of a very pro-Microsoft move. There is little concern about creating more competition in the space if you are not part of Microsoft or part of the 1% of cloud gaming. Microsoft does not have a good history of playing nice in any marketplace they are in so I see no reason to believe they will do so moving forward. In two game development cycles those same cloud gaming services, could find themselves in the cold while Sony and Nintendo might be starved for popular game titles. If you doubt that Microsoft might not go this route to solidify their position, look at a recent reply when asked if there would ever be a time when games might not be released in the UK due to the veto on the deal; “Let's wait for it all to play out.” This is a veiled threat to the UK that Microsoft could still impact their economy if things do not go their way. The UK CMA has defended their position and is not backing down even with the hinted threat from the Microsoft boss.

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