I don’t think Sony believes MS is going to pull COD away from them, at least not for the foreseeable future. They are just using that in an attempt to stop the acquisition. If MS gets through this with no concessions, it is doubtful they turn around and pull COD out of spite. It would be a bad look for MS even if you just look at through the lens of needing future deals to be approved by regulators.
The real question is if the deal fails and ATVI stock tanks causing a cascade of negative effects on the company. I’m pretty sure you’d have some people there unhappy with Sony, especially upper level stock option holding people. This is one aspect people seem to be glossing over. ATVI might implode if this deal fails.
Yes, that is a gamble and it may not pay off. If there are no concessions and there is no signed deal, Xbox could do a number of things. For instance, they could move away from parity. They could make exclusive Xbox content. They could only keep the Warzone equivalents coming to PS and switch COD to release every 2-3 years only on Xbox/PC. Just a lot of risk to take for avoiding what is an extremely fair deal and a low percentage gamble its blocked.
Apart from COD in Game Pass and losing the marketing rights, what Sony is concerned about most is the next acquisition. If complaining about ABK forces Microsoft to re-assess whether another large acquisition in gaming is worth this level of scrutiny, that’s a win for Sony.
However, this isn’t Microsoft’s first rodeo, so I doubt a little pressure from regulators and their rivals is going to stop them.
Yeah, I agree. Sony knows that Microsoft will treat COD like Minecraft (they stated multiple times in the open), so they won’t lose even if they don’t accept the contract.
From the very beginning Microsoft took a wrong stance on that matter, but to be fair - they 100% did not expect Sony to oppose the deal that much to a point where it might bring regulators to a serious scrutiny of the gaming industry itself (which is odd thing to do for Sony considering that Sony is a well known offender there). Though Sony’s rhetoric has been very aggressive from the very beginning - while Phil said that he talked to friends at Sony, Sony said the relatively unfriendly that “we expect Microsoft to fullfill the contractual obligations”.
Nothing new basically, but december migth be spicy when FTC will decide to talk.
But the conclusion is that not investing into more options and value for the consumer is the solution Follow Sony’s lead and achievements there because they are not a big tech giant. Shame that regulators are soon keen on stifling the innovation and emboldening the old guard.
That last paragraph is the key point I feel. If the deal would require behavioural concessions under normal circumstances, but the FTC is not interested, then they have an uphill task to prove that the deal needs to be outright blocked.
I don’t believe that they will be able to block the deal - them trying to sue it is a high probability - but blocking the deal is not possible for them. No arguments that can be used against the deal. None. Especially in USA where there are many more streaming services that in Europe or UK. Luna, Geforce Now etc.
Could Microsoft just simply pull out of cloud gaming due to all the losses and lack of interest like Google? The industry the regulators are concerned with is not even profitable, it seems insane.
Because ABK is a sure thing as far as a growth vector and Cloud Gaming has already proven a money pit that most people aren’t interested in and most countries dont have the infrastructure to support yet. Lastly, it seems to be the only thing regulators have where Xbox has the market share required to block the deal (albeit market share of a market that has yet to make a single profit).
And as they are trying to predict the future (using crystall ball I guess) the arguments that Sony used align with the regulatory outlook
ABK might decide to join cloud market independently in the future - you cannot prove or disprove that, however, but regulators are trying to predict the future anyway so they can assume that ABK would pivot to cloud in the future thus Microsoft is killing a competitor
Microsoft is a tech titan - they are too big and have too much power to allow to invest big in their Game Pass which also aligns to FTC’s stance
Out of my head I came up with two. So FTC might claim that
Microsoft has resources to create its own COD or invest in mobile and thus it would create more competition
Microsoft is leveraging their big amount of resources
Case with Within demonstrated that FTC doesn’t care. Essentially their approach will lead to stagnation in the market and tech industry, but well I guess that’s the price they are willing to pay.
It did not stop FTC with Meta/Within where they are literally losing money on VR and nobody else is interested in it (outside Sony’s overpriced stuff). Meta for example can decide to pull the plug on VR tomorrow and it will destroy the whole VR market and all the companies that invested into that as nobody is seriously interested in it.
FTC just assumes that VR will grow and they want to stop META from investing there. But it might also kill the VR market - then they will pat their backs that they stopped the monopoly.
ABK is very complex and it touches a lot of areas. But as regulators are trying to predict the future, the case can be made that by investing too much they will kill the competition. It is stupid, but regulators are playing Nostradamus anyway.
The courts had to accept that argument in order to give the FTC the power to litigate at all to begin with. They only received that because the VR platform is 75% Meta.
The markets are also, crazy different in size for VR and cloud gaming. VR gaming is already a 20 billion dollar industry. Cloud gaming is a 650 million dollar industry and that was including Google Stadia, so now its likely considerably less. Selling used cars in any particular small city is a larger market than cloud gaming at this point lol.
I have seen several references (including in this thread) to the deal’s “deadline” to close - implying the deal will have to be completely scrapped if it doesn’t close by July 2022.
I have always assumed this is just a misunderstanding of the “expected to close in fiscal year 2022” statement. But I have seen talk of the deadline so frequently that now I am wondering… Is there some contractual deadline in the deal?
The funny thing is that FTC is losing against Facebook/Whatsapp/Instagram as even with a monopoly this tech giant is failing at stopping the rise of TikTok and who knows what other service will arrive in the future.
But ABK is very very complex. You cannot predict how the nascent markets will behave in the future - you can make a case that Microsoft/Game Pass is Meta/VR because nobody else is seriously investing into the gaming. But unlike Meta we still have other streaming services, however some of them are not available in various countries and so on.
Then we have the mobile angle where you need a content to siphon people from App Store or Google Store, so allowing the deal is beneficial for the future market competition however if the acquisition is blocked then Microsoft will try to invest into mobile gaming more which is also a competition.
And then of course there is that worker angle. As CWA supports Microsoft, by blocking the deal FTC will technically create trouble for unionization efforts which will cause a backlash.
That’s why Sony is pushing that angle that Game Pass is too strong and cloud is a nascent market where xCloud is essentially the only one big service (outside of USA I can see that argument working but with Geforce Now it is tough too). And Google might also push that angle that by not having Bethesda and ABK content (regardless if ABK were to come to streaming services anyway - that’s why Microsoft is pushing in their documents that Kotick was opposing that) contributed to Stadia’s demise.
Anyway the deal is very complex. If FTC lost the case against Illumina, then no way it can win against ABK. But it does not mean it won’t try to stall it.
I am not sure, somebody said that in the original contract it was said that if the deal does not close by July 2023, then ABK/Microsoft has to renegotiate again. But I did not check however some media outlets are running with it, so I don’t know.
Great point on GeForce Now in cloud gaming. Between the competition there in cloud gaming and the strong competition in subscription services, Microsoft does not have 50% of the market in any platform area in the US.
The most annoying thing that even after all their antics, Sony won’t lose COD unfortunately.
But the argument can be made that by allowing ABK, Microsoft can gain big lead in cloud streamig market (thus Microsoft is arguing that COD won’t make a difference, while Sony is pushing an angle that COD will lead to that). The idea of regulators is to prevent the situations like Facebook/Instagram/WhatsApp from happening.
P.S. hilarious thing is that you cannot prove that cloud streaming market can succeed in the first place - yet regulators are trying to regulate it before it grows. One of the reasons I guess why Microsoft is pushing the idea that cloud streaming won’t replace the regular market.
Thats the idea, and the law may be setup for them to stop those situations. Those were situations where you had social media as an established huge market at the time and Facebook already with a monopoly share of the market. Facebook was basically THE social media when it purchased Instagram in 2012. Facebook had 900 million monthly active users at the time of purchase.
Follow Sony’s lead and achievements there because they are not a big tech giant. Shame that regulators are soon keen on stifling the innovation and emboldening the old guard.