Microsoft paints Sony as ‘complainer-in-chief’ against $75bn

Introduction

Microsoft’s planned $75 billion acquisition of Activision Blizzard represents one of the largest deals in gaming history. Yet the tech giant now finds itself locked in an intense regulatory showdown—largely driven by objections from rival Sony. In filings with competition authorities around the world, Microsoft has labeled Sony the “complainer-in-chief”, arguing that Sony’s repeated interventions are motivated by self-interest rather than genuine antitrust concerns. This article examines the mounting legal battle, Sony’s objections, Microsoft’s counterarguments, and what the outcome means for gamers, developers, and the future of the industry.

1. Background: The $75 Billion Activision Blizzard Deal

In January 2022, Microsoft announced its intention to buy Activision Blizzard, the maker of blockbuster franchises like Call of Duty, World of Warcraft, and Candy Crush, for $75 billion. Microsoft framed the acquisition as a way to:

• Bolster its Xbox lineup with high-profile content
• Enhance its Game Pass subscription service
• Accelerate its push into cloud gaming

At closing, Microsoft would become the third-largest gaming company by revenue, behind Tencent and Sony, reshaping the competitive landscape.

2. Sony’s Objections: Protecting PlayStation’s Crown

Almost immediately after the announcement, Sony—owner of the PlayStation brand—voiced strong objections to the deal. Key Sony arguments:

1. Exclusive Content Threat: Sony warned Microsoft could withhold Call of Duty and other major titles from PlayStation, undermining consumer choice.
2. Subscription Monopoly Risk: With Game Pass potentially including Activision games, Sony argued Microsoft could dominate the subscription market and stifle competition.
3. Cloud Gaming Concerns: Microsoft’s Azure cloud platform, combined with Activision content, could create an unfair advantage in streaming games.

Sony submitted detailed filings to the U.S. Federal Trade Commission (FTC), the European Commission, and the UK’s Competition and Markets Authority (CMA), urging regulators to block or impose strict conditions on the acquisition.

3. Microsoft’s Response: “Complainer-in-Chief”

In its rebuttal to the CMA and FTC, Microsoft cast Sony as the deal’s primary adversary—and a hypocrite given its own licensing deals. Microsoft’s main counterpoints:

• Multi-Platform History: Activision has released Call of Duty on PlayStation for nearly two decades, earning Sony billions in licensing fees. Endangering that relationship would risk substantial revenue.
• Binding Contract: Microsoft has signed a legally binding agreement to keep Call of Duty on PlayStation for at least ten years post-acquisition.
• Competitive Cloud Ecosystem: Microsoft argues cloud gaming relies on open platforms and that it will continue licensing Activision titles to all services, not just its own.

In filings, Microsoft writes that Sony has a financial incentive to block the deal, given the hundreds of millions in licensing revenue tied to Activision titles—a dynamic that makes Sony the deal’s “complainer-in-chief.”

4. Regulatory Landscape: Multiple Fronts

4.1 United States (FTC)

In December 2022, the FTC sued to block the deal, citing antitrust concerns. A U.S. district court initially sided with Microsoft, but the FTC has appealed, prolonging the uncertainty.

4.2 United Kingdom (CMA)

The CMA provisionally ruled against the deal, agreeing that Microsoft could impair competition in console and cloud gaming. Microsoft has appealed this decision, entering a lengthy legal process.

4.3 European Union

The European Commission opened a Phase II investigation, focusing on remedies rather than outright blocking. Microsoft has proposed various concessions, such as making Activision games available on rival cloud platforms under fair terms.

Each jurisdiction follows its own timeline, but global regulatory unity could prove decisive.

5. Implications for Gamers and Industry

5.1 Gamers’ Access and Choice

• Console Availability: If regulators block the deal, Call of Duty stays on all platforms indefinitely. If approved, Microsoft’s contract assurances will be critical.
• Subscription Value: Game Pass subscribers could see Activision titles added, boosting value. Sony fears this model would draw subscribers away from PlayStation Plus.

5.2 Developer Ecosystem

• Talent Integration: Activision Blizzard’s development studios joining Microsoft could benefit from additional resources and cross-studio collaboration.
• Workplace Culture: Ongoing issues at Activision concerning workplace misconduct might get attention under Microsoft’s governance—potentially improving culture and retention.

5.3 Competitive Dynamics

• Cloud Wars: Amazon Luna, Google Stadia (now winding down), and Sony’s PlayStation Now all vie for a piece of streaming. Microsoft’s expanded content library strengthens Azure’s gaming push.
• Subscription Arms Race: Sony may need to enhance PlayStation Plus—perhaps adding day-one releases—to counter Game Pass’s expanded offerings.

6. The Legal Tug-of-War: What’s at Stake

6.1 Precedent for Tech M&A

Regulators’ handling of the Microsoft-Activision deal could set a benchmark for future tech acquisitions, especially in digital content and platform markets. Will vertical mergers (platform owner buying a content provider) face tougher scrutiny?

6.2 Global Competition Policy

Divergent outcomes in the US, UK, and EU may create patchwork scenarios—forcing Microsoft to offer differing concessions per region or face deal collapse in some markets.

7. Can Sony and Microsoft Find Common Ground?

Neither side benefits from indefinite litigation. Potential compromise paths include:

• Extended Licensing Commitments: Sony could agree to limited-term licenses while Microsoft retains cloud rights broadly.
• Cross-Platform Cloud Deals: Opening Activision games to rival clouds under equal cost and performance terms.
• Regulated Access: Pricing safeguards for subscription bundling to prevent predatory pricing.

Such solutions require negotiation and political will—rare in high-stakes tech wars.

8. What Happens Next?

• Q3 2024: The CMA’s final decision expected after appeal hearings.
• Q4 2024: U.S. appellate court ruling likely on the FTC’s case.
• Early 2025: EU remedies decision could align or diverge from UK/US outcomes.

Pending these rulings, Microsoft and Activision have paused integration planning—though internal preparations continue. Gamers and investors watch closely, as a final verdict will reshape the future of gaming consolidation.

Conclusion

The $75 billion Activision deal pits two gaming giants against each other in courts and regulatory bodies worldwide. Microsoft, eager to bolster its Game Pass and cloud ambitions, accuses Sony of acting as the “complainer-in-chief” to protect its lucrative licensing revenues and console dominance. Sony, in turn, questions Microsoft’s commitments and fears market foreclosure. With parallel legal battles in the US, UK, and EU, the outcome remains uncertain—but the implications for gamers, developers, and competition policy are profound. Whether through binding contracts, regulatory concessions, or outright blocking, the final resolution will define the balance of power in gaming for years to come.