Ooooh boy, that’s fun!
Microsoft is trying to buy Activision Blizzard for $69 billion. Activision is the publisher of franchises such as Call of Duty, Warcraft and Candy Crush, and Microsoft hopes the company’s successful franchises will help it boost Xbox Game Pass as well as its fortunes in mobile games, where Microsoft is currently largely absent.
A deal of this magnitude must overcome various regulatory hurdles before it becomes official. Some of Microsoft’s biggest markets, including the UK, US and EU, have yet to approve the deal, pending various types of investigative processes.
UK regulator CMA has us scratching our heads recently over some of its strange language and arguments regarding the deal. It’s easy to level accusations of bias, but as I’ve written before, I’m more inclined to call the CMA incompetent. Indeed, the British establishment has been known for its technological illiteracy in the past, having once asked Microsoft “when are you going to ban algorithms?” In an attempt to sound a bit more informed on the subject of games, an EU official recently tweeted his stance that he was looking to keep Call of Duty “on his PlayStation”, leading to accusations of bias on one side, with others claiming the Furore was tantamount to a storm in a 16-bit teacup.
I’d say it’s a lot more than the aforementioned storm in a cup of tea, though. Given that this particular representative held a position within EU antitrust departments for the better part of two decades.
Will Microsoft get a fair hearing on this topic? Or will the negativity that has been spreading around the brand for decades have a chilling effect on the final decision?
What did the EU say about the Activision-Blizzard merger with Microsoft?
The drama began when Ricardo Cardoso, deputy head of the interagency and outreach unit in the European Union, sent out a tweet that quite blatantly read as favoring Sony in the regulatory battleground.
“The Commission is working to ensure that you will still be able to play Call of Duty on other consoles (including my Playstation)” Cardoso wrote, before making a relatable joke about government agencies having terrible stock footage. After writers like me, Tom Warren of The Verge and Ryan McCaffrey of IGN questioned his choice of words and the apparent perception of bias, Cardoso clarified: “I am not involved in the assessment of the merger and do not even work in the merger department. As is clear from my profile, my comments are personal and not a position of the Commission, whose decision will be taken based on the facts and the law.” However, that was far from the end of the drama.
It wasn’t long before the internet discovered that Cardoso was, in fact, part of the regulatory “community” for 17 years before recently stepping into his current role.
“Some personal news”: I’m delighted to join the @JornaKerstin team as Deputy Head of Unit for Inter-Institutional Relations and Outreach at @EU_Growth. I will miss the @EU_Competition community, 17 years have passed in a flash but I am delighted with this new challenge! Find the differences? pic.twitter.com/wFIkmyXyEAJune 16, 2022
In response to the drama, EU spokeswoman Adriana Podesta issued a statement to Tweaktown, promising that Cardoso would not be involved in the assessment of the Activision-Blizzard-Microsoft merger.
“As you have correctly pointed out, Mr Cardoso works within the Director General for Internal Market and not within the Directorate General for Competition. Mr Cardoso is not involved in the assessment of this transaction. Furthermore, as his Twitter profile clearly indicates, he tweets in a personal capacity.”
So what, no big deal right? I mean, after all, he wrote “views=mine” in his Twitter profile, which confirms beyond a shadow of a doubt that his stance on this deal will in no way influence or advise his former friends from the regulatory “community”. right?
… OK ?
Is it REALLY serious?
I’m sorry, but when you’re involved deeply with a government agency, you don’t just write “opinions=personal” in your Twitter bio and waive all responsibility. The EU is already a deeply suspicious institution in large swaths of Europe, and like it or not, when you represent something like competition regulation, even in a tangential capacity, it would at least be prudent to pay attention to how you project your opinions on social media.
To me, this highlights a more widespread problem that Microsoft has been working to address since the late 90s. Among a certain age group, Microsoft is seen as a bully, as an aggressor, and honestly anti-competitive. In the 1990s, Microsoft was embroiled in a notorious antitrust case over its Internet Explorer web browser, which was one of the first major Internet-related legislative fallouts during the dot com boom. Microsoft v. USA was called it, and the fairly public affair led to a cloud of negative perception that persists even to this day, at least on a substantive level.
And honestly: good.
Microsoft and Xbox fans might not want to hear this, but the big Redmond giant has enjoyed a prime position as one of the world’s top $1 trillion companies. Few companies have produced more millionaires than Microsoft, due to their near-total monopoly on home and office desktops, and their dominant positions in the cloud, enterprise software and beyond. Microsoft should be under the microscope, because while I believe the company has largely cleaned up, it wouldn’t be hard for it to fall back into greedy, anti-consumer practices if we, as onlookers, let’s take our eyes off the ball.
No one serious is saying this deal shouldn’t be looked at. And I would go further and say that no one serious wants to see Call of Duty removed from PlayStation. No one serious wants to see Call of Duty downgraded in any way on PlayStation, or want to see PlayStation gamers miss out – besides all but the most hardcore fanboys. The benefit of this offer for gamers is that we will include Call of Duty in Xbox Game Pass, at $10 per month instead of $70 per game. I would advocate that Microsoft also bring this deal to PlayStation Plus, so that all players can benefit from it, no matter where they are or what they choose to play.
Microsoft is in a prime position to be able to make this acquisition in the first place, and if they are to be allowed to go ahead, it should be with the understanding that it will benefit gamers – all gamers. But that’s not what PlayStation wants here.
I’ve written before about how Sony knows it won’t lose Call of Duty from PlayStation, but the fact that Call of Duty will be moving to a rival platform reduces their bargaining position to various highs. Things like Sony’s cross-play tax that it charges publishers who dare to want to allow PlayStation gamers to connect to Xbox gamers. Sony’s anti-Xbox Game Pass clauses that force developers who want to publish on PlayStation to decline any Xbox Game Pass offers, etc. How do these things create competition and benefit consumers?
It is with these things in mind that the position of regulators continues to be disconcerting. Cardoso may not be directly involved in the merger, but the fact that he’s been in this “community” (his words) for 17 years probably gives him some influence over individuals who may not understand not the situation as well as us. hope.
The gaming industry is not like other industries. We’ve seen a $5 indie game called Vampire Survivors come out of nowhere with a $1,500 budget and dominate the headlines and social media without an ounce of marketing, sharing a stage with games with hundreds of millions of dollars supporting them. This simply wouldn’t happen in other creative industries, and it often feels like regulators don’t fully understand how competitive, dynamic and in good health the competition is in the gaming industry compared to others.
It is through this cloud of ignorance that it is worth asking the question: could a few knowledgeable “players” within the EU influence regulatory hearings to achieve the desired results? Keeping Call of Duty on “my PlayStation” indeed.
Will Microsoft get a fair hearing?
No one serious is suggesting that this deal shouldn’t be looked at, especially in Europe. Activision-Blizzard employs literally thousands of people, many of them in Europe. Microsoft is known for its small customer support footprint. Frankly, I’m concerned about things like: what might happen to the quality of Warcraft support over time? Will Activision-Blizzard staff be able to unionize more easily? Will I ever get a new Starcraft *cough*? Etc. As for the competition, though? The idea that Microsoft, owner of Call of Duty, will reduce or exclude PlayStation in some way is at best a joke, and at worst a talking point of Sony.
Regulators are supposed to foster and develop competition, not stifle it. Microsoft is a big company, but its footprint in gaming – especially in Europe – puts it well and truly behind its competitors. The idea that Nintendo isn’t competing in the same space, according to the UK’s CMA, is also a joke. The audience overlap is obvious to anyone with a brain, and Nintendo is able to maintain dominance without a single Call of Duty bullet or boot.
But I digress. The thing is, in revealing his personal feelings on Twitter, Cardoso is quite cautiously reminding us that regulators are human too, and hey, that’s okay. What is wrong is abusing a government position to influence outcomes that favor you personally, when it comes to protecting consumers, not companies or shareholders. And hey, if nothing else, it’s a damn bad look.
#position #Microsoft #Activision #Blizzard #deal #compromised