Microsoft President: Activision merger is for gamers' benefits, FTC lawsuit "would be a huge mistake"

Microsoft President Brad Smith wrote an op-ed in the Wall Street Journal, and again explained Microsoft’s stand and objective for proposing the $69 Activision merger. According to Smith, the Federal Trade Commission’s reported plans to sue Microsoft “would be a huge mistake,” adding it “would hurt competition, consumers and thousands of game developers.”

In the article, Smith gets into detail on why the deal will actually benefit the gaming community and the entire market in general and how Microsoft is the actual underdog in this fight, opposite to what Sony is claiming. Specifically, Smith points out how Microsoft is still in the lower ranks in the console market, in addition to its limited market reach in the mobile gaming section.

“Microsoft faces huge challenges in the gaming industry,” Smith says. “Our Xbox remains in third place in console gaming, stuck behind Sony’s dominant PlayStation and the Nintendo Switch. We have no meaningful presence in the mobile game industry. That segment of gaming generates the most revenue and is the fastest-growing, but a significant portion of the revenue goes to Google and Apple through their app-store fees.”

According to Smith, the merger won’t just arm Microsoft to be capable of competing with Sony (which is supposed to lead to better market competition that regulators want) but will also enable it to compete better with Google and Apple, which are both undeniably reigning the mobile market. It is no secret that the software giant is aspiring to get a wider reach in the said section. However, Google and Apple, which have huge power over handheld devices due to their Android and iOS systems, always find a way to block Microsoft from going forward. UK’s regulator, the Competition and Markets Authority (CMA), even admitted it and even pushed it to have its own investigation regarding this issue.

“Responses to the consultation, which have been published today, reveal substantial support for a fuller investigation into the way that Apple and Google dominate the mobile browser market and how Apple restricts cloud gaming through its App Store,” CMA explains in a press release. “Many of those came from browser vendors, web developers, and cloud gaming service providers who say that the status quo is harming their businesses, holding back innovation, and adding unnecessary costs.”

For Microsoft, Smith explains, the merger translates more than the competition. It means reinventing the availability of famous huge games that customers could only play on certain devices. The Microsoft President goes on to explain that once the deal closes, Microsoft will be able to make Activision’s well-known games on other platforms without charging additional fees, basically helping customers save more. 

“Acquiring Activision Blizzard would enable Microsoft to compete against [Sony, Apple, Google] through innovation that would benefit consumers,” Smith explains. “While modern consumers can stream videos or music on multiple devices on low-cost subscription plans, many games can often only be individually purchased and downloaded onto one device. Microsoft wants to change that by offering consumers the option to subscribe to a cloud gaming service that lets them stream a variety of games on multiple devices for one reasonable fee. It would also benefit developers by allowing them to reach a much broader audience.”

Smith admits that the multi-platform gaming service will only be possible through a considerable number of popular games, which Microsoft currently doesn’t have. Hence, this is what the acquisition is about. In case this plan is made possible, supporters and patrons of Activision will have more options to access their games without spending much. This will be a good thing on the part of consumers. And, yes, it might mean an unfavorable effect on the gaming business of Sony and other gaming giants, but the bottom line of this proposed idea will be more beneficial for end users, who regulators must prioritize over companies. The FTC’s recent actions, however, seem to reflect the opposite.