Sony says Microsoft could make Call of Duty a "de facto exclusive" in latest attempt to block Activision deal
In a new response to the UK Competition and Markets Authority's ongoing investigation into the Xbox Activision deal, Sony argues that Microsoft "would have the incentive" to box PlayStation out of the Call of Duty market by making the series "de facto exclusive" to its platform.
Sony argues that, "as well as a total foreclosure," Microsoft could pursue partial foreclosure – that is, neutering competition more indirectly – through several means. The most important point here is the prospect of Microsoft "making Call of Duty available on multi-game subscription services (MGS) only on Game Pass or providing Call of Duty on PlayStation Plus at a commercially unviable price, thereby making it de facto exclusive."
The notion of a "de facto exclusive" essentially counters Microsoft's repeated claims that it wouldn't outright withhold Call of Duty from PlayStation; it asserts that it wouldn't have to in order to hurt PlayStation's ability to compete. Parity between Game Pass and PlayStation Plus has been a sticking point throughout this process, and Sony's bringing that to a head here by arguing that secondary differences in access, or perhaps licensing terms for subscription services, could still make Xbox the go-to console for Call of Duty.
Sony also reiterates and doubles down on other anti-competitive strategies including Microsoft making Call of Duty cost more and/or run worse on PlayStation, as well as "restricting, degrading, or not prioritizing investment in the multiplayer experience on PlayStation." This doubles down on the company's stated fears that Microsoft might give it a deliberately sabotaged version of Call of Duty. Apropos of nothing, I'd like to point out that a response from an unnamed third party "found the arguments against this acquisition to be slightly exaggerated and out of proportion," and I simply cannot imagine why.
Sony's concluding argument minces no words: "Microsoft's previous acquisitions and strategic rationale indicate its incentives to foreclose. Foreclosure will cause irreparable harm to the console and cloud gaming industry, to the detriment of gamers and competition. The way to prevent that harm is for the transaction to be blocked." This certainly lines up with reported comments from PlayStation boss Jim Ryan, who apparently told Activision that "I just want to block your merger."
In its own response, Microsoft again insists that it "stands ready, as it has since day one, to enter an agreement with Sony to ensure that [Call of Duty] remains on PlayStation," and has proposed remedies that would "guarantee parity between the PlayStation and Xbox platforms in respect of [Call of Duty]."
Curiously, Microsoft also argues that the CMA must show more evidence that, even if it were to withhold Call of Duty from PlayStation or give it a price hike, this would lead not just to "'some diversion' of would-be PlayStation buyers," with some switching to Xbox instead, but rather true foreclosure in the market. To that point, Microsoft maintains that "some 'shift in share' is not enough," as PlayStation already "holds a significant incumbency advantage over Xbox."
To sum up the several dozen pages of legal squabbling I've had to pick through, this battle is still at a relative standstill with both armies leaning into their own tried-and-true tactics, though the fighting is picking up on the front of literal versus implicit exclusivity for Call of Duty. Microsoft is making broad assurances and Sony is drilling into more specific scenarios and conditions. Expect to see more responses in the future, because this ain't over for anyone.
After announcing 10-year deals with everyone and their dog in a transparent bid to make this deal appear pro-competitive, Microsoft is getting absolutely clowned on.