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Microsoft and Sony are feuding behind the scenes over the Activision Blizzard acquisition, and Microsoft is no longer holding back with regulators.

ByTom Warren / @tomwarren Tom Warren / @tomwarren

12 October 2022, 6:23 PM UTC||

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Alex Castro / The Verge illustration

Microsoft is displeased with Sony and the UK's Competition and Markets Authority, which signaled an in-depth review of Microsoft's $68.7 billion acquisition of Activision Blizzard last month. The CMA has now published its full 76-page report (PDF) on its findings.The CMA is concerned that Microsoft's Activision Blizzard acquisition will reduce competition in game consoles, subscriptions, and cloud gaming, but Microsoft believes the regulator has been overly influenced by Sony's lawyers.

Microsoft pleaded for its deal on the day of the Phase 2 decision last month, but now the gloves are off. Microsoft calls the CMA's concerns "misplaced," claiming that the regulator "adopts Sony's complaints without considering the potential harm to consumers" and "incorrectly relies on self-serving statements by Sony that significantly exaggerate the importance of Call of Duty."

The CMA acknowledges that ABK's newest games are not currently available on any subscription service on the day of release, but believes that this may change as subscription services continue to grow, according to the UK regulator."After the merger, Microsoft would gain control of this critical input and could use it to harm its competitors' competitiveness."

Microsoft's full response to the CMA, obtained by The Verge, also includes parts in which the company attempts to make it appear as if it somehow sucks at gaming and can't compete. Microsoft claims Xbox "is in last place in console," "seventh place in PC," and "nowhere in mobile game distribution globally," and claims it has no reason to harm or degrade rival cloud gaming services because it wants to "encourage the major shift in consumer behavior required for cloning."

Microsoft may have finished last in console sales during the previous generation, but it is certainly investing billions of dollars to ensure that any future Xbox sales aren't less than half of those of the PlayStation and that its Xbox Game Pass bet pays off.

"PlayStation currently has a larger share of the console gaming market than Xbox, but the CMA considers Call of Duty to be sufficiently important that losing access to it (or losing access on competitive terms) could significantly impact Sony's revenues and user base," the CMA says.

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Call of Duty is at the heart of Sony and Microsoft's feud.Image courtesy of Activision.

Sony demonstrated how important Call of Duty is by labeling Microsoft's offer to keep Call of Duty on PlayStation "inadequate on many levels." The Verge revealed last month that Microsoft Gaming CEO and Xbox chief Phil Spencer made a written commitment to PlayStation head Jim Ryan earlier this year to keep Call of Duty on PlayStation for "several more years" beyond the existing marketing deal Sony has with Activision.

Microsoft now claims that keeping Call of Duty on PlayStation is a "commercial imperative for the Xbox business and the economics of the transaction." Microsoft claims that pulling Call of Duty from PlayStation would jeopardize revenue and that "Microsoft has been clear that it is counting on revenues from the distribution of Activision Blizzard games on Sony PlayStation."

Microsoft also accuses Sony of not welcoming competition from Xbox Game Pass and of blocking Game Pass on PlayStation. "This increased competition has not been welcomed by the market leader Sony, which has elected to protect its revenues from sales of newly released games, rather than offer gamers the choice of accessing them via its subscription, PlayStation Plus," Microsoft says.

If the battles in the United Kingdom are any indication, this acquisition could get messy as Microsoft and Sony battle it out behind the scenes to sway regulators. Microsoft even has a dedicated website to highlight its arguments as it seeks to convince regulators that its massive deal isn't bad for gamers.We're still months away from final regulator decisions, but expect this battle to spill out onto the streets of the internet.

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