Xbox-Activision Deal – What is Going on?

Microsoft's proposed acquisition of Activision Blizzard has hit a major stumbling block. What does that mean for the deal?

Posted By | On 09th, Dec. 2022

Xbox-Activision Deal – What is Going on?

In January of this year, Microsoft announced that it would be acquiring Activision Blizzard in a deal worth nearly $69 billion, though as the months have passed by, the proposed acquisition has run into a number of hurdles. Of course, any acquisition – especially one of this magnitude – has to jump through all the necessary regulatory hoops before it can be finalized, but as the last few months (and especially the last few days) have made abundantly clear, those hoops are proving harder to jump through for this particular acquisition. So what exactly is going on with the Xbox-Activision deal?

Well, in the here and now, this is the big headline- just recently, it came to light that the United States’ Federal Trade Commission (or the FTC) is filing an antitrust lawsuit against Microsoft in administrative court in a bit to block the company’s impending acquisition of Activision Blizzard. According to the FTC, should the deal go through, Microsoft will have the power to withhold major properties like Call of Duty from rival platforms, or even manipulate pricing and release inferior versions of games on said rival platforms. The primary fear being cited is the impact that the deal could potentially have on competition in the console, subscription, and cloud gaming markets.

And of course, the United States isn’t the only place where the acquisition has hit a few stumbling blocks. Though Brazil’s Administrative Council for Economic Defense approved the deal in October, it is being scrutinized heavily in other parts of the world, with both the EU’s European Commission and the UK’s Competition and Markets Authority having expressed concern over how it could impact competition- in particular, how it could impact PlayStation.

And yes, that has indeed been the primary stumbling block that Microsoft has run into in its bid to get the deal finalized. Recently, it was announced that the company had entered into an agreement with both Nintendo and Valve to keep releasing Call of Duty on Nintendo platforms and Steam for the next 10-years. The message was clear- that Microsoft has no intent for the next several years to turn Call of Duty into an Xbox-exclusive franchise. A similar deal is also on the table for PlayStation, though it’s one that Sony is yet to sign, while clearly, the authorities (or the FTC, at the very least) aren’t convinced that Microsoft does indeed plan to follow through on that commitment.

Given the massive money-maker that Call of Duty has been on PlayStation in particular, it’s not surprising to see Sony objecting to the prospect of the franchise being owned by Microsoft this publicly and vehemently. Call of Duty earns massive amounts of money on PlayStation every year from software sales and in-game purchases for everything from battle passes to cosmetics, while Sony has, of course, also had an exclusive marketing deal in place with Activision for the franchise that entails exclusive benefits and timed exclusive content for Call of Duty players on PlayStation platforms every year. In light of that, when we get reports that PlayStation CEO Jim Ryan has personally visited the EU’s headquarters in Brussels to express his concerns over the Microsoft-Activision deal, it’s hard to be too terribly surprised.

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Interestingly, Xbox boss Phil Spencer recently had interesting things to say on the issue, and on Sony’s role in the deal in particular. In a recent interview with Bloomberg, he said: “There’s been one game industry participant that’s really been raising all the objections, and that’s Sony, and they’ve been fairly public about the things that don’t meet their expectations. From where we sit, it’s clear they’re spending more time with the regulators than they are with us to try and get this deal done.”

Something that’s beginning to become clear at this point is the fact that what things may very well ultimately boil down to is whether or not Sony – and more importantly, regulatory authorities around the world – are going to be convinced that Microsoft isn’t going to pull Call of Duty from PlayStation. The FTC has said that the likes of Redfall and Starfield are both evidence that Microsoft may very well end up withholding other future major releases from rival platforms as well, and it’s clear that that’s very much been Sony’s concern as well.

Microsoft, on its part, has taken steps to curb those worries. The aforementioned deals agreed with Nintendo and Valve were obviously made as public as they were to provide proof of the company’s intent to not take Call of Duty away from any platform, while again, a similar deal has also been offered to Sony. Sony, on the other hand, is clearly holding out for something that is even longer-term and much more binding and concrete in terms of guarantees of Call of Duty not only remaining on PlayStation, but having parity with Xbox versions in every way. That, or the deal simply falling through.

On multiple occasions, Microsoft has made the argument that pulling Call of Duty off PlayStation would actually be damaging for the franchise, given how much revenue it generates on the platform, and has likened its situation to how the company has handled Minecraft as a multiplatform franchise since its acquisition in 2014.

Speaking in a recent interview with YouTube channel Same Brain, Xbox boss Phil Spencer said: “We’re not taking Call of Duty from PlayStation. That’s not our intent. As long as there is a PlayStation out there to ship to, our intent is that we continue to ship Call of Duty on PlayStation, similar to what we’ve done with Minecraft since we owned that. We’ve expanded the places where people can play Minecraft, we haven’t reduced the places, and it’s been good for the Minecraft community, in my opinion. And I want to do the same as we think about where Call of Duty can go over the years.”

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Similarly, Spencer has also tried to allay concerns over any loopholes that Microsoft may be trying to bake into its commitments, and has said that the company doesn’t intend to devalue the Call of Duty brand on PlayStation by, say, tying it to Game Pass or by releasing only cloud versions of games. In an interview with The Verge, Spencer recently said: “Native Call of Duty on PlayStation, not linked to them having to carry Game Pass, not streaming. If they want a streaming version of Call of Duty we could do that as well, just like we do on our own consoles. There’s nothing hidden. We want to continue to ship Call of Duty on PlayStation without any kind of weird ‘aha I figured out the gotcha’ as Phil said ‘our intent.’ I understand some people’s concerns on this, and I’m just trying to be as clear as I can be.”

So what exactly does all of that mean for the acquisition, especially in light of the FTC having moved to block it? Well, we’re not going to sit here and pretend to be experts on international competition law (though some of you may be, in which case, fire off in the comments below)- but though it’s hard to say with certainty yet whether or not the deal will end up going through, one thing that’s abundantly clear is that even if it does, it’s not going to happen by June 2023, which is what Microsoft and Activision Blizzard were previously expecting.

The FTC lawsuit is likely to run for several months, if not significantly longer than that, while there are several other international regulatory bodies that have yet to greenlight the deal. If all of that does go through – and that’s by no means looking like a certainty at this point – it will still be a while before the ink dries on the deal and Activision Blizzard is officially welcomed into the fold by Microsoft and Xbox. Until then, the next few months are promising to be interesting, to say the very least.

Note: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, GamingBolt as an organization.


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