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Why Call of Duty game matters to the FTC in Microsoft-Activision deal

1K View2022-12-25

Vancouver, Washington, resident Michael Feist has logged nearly 163 hours on Call of Duty: Modern Warfare II since it was released two months ago. That’s nearly a week spent at virtual war on his Xbox Series X, and exactly the kind of commitment Xbox-maker Microsoft is investing in by acquiring gamemaker Activision Blizzard for $69 billion. The 27-year-old and his brothers took days off work to play when it came out.Call of Duty, one of the most successful video game franchises ever, has been in Feist’s life ever since he was a child. He used to wait in line at GameStop for the latest Call of Duty release with his stepdad.

Microsoft competes with Sony and Nintendo in the video game world, but remains in last place, according to Microsoft. With the acquisition, the Redmond-based tech giant wants to become more competitive in the industry.

“Its vision for the transaction is simple: Xbox wants to grow its presence in mobile gaming, and three-quarters of Activision’s gamers and more than a third of its revenues come from mobile offerings,” according to Microsoft.

The Activision acquisition didn’t sit well with the Federal Trade Commission, the newly emboldened federal agency tasked with stopping monopolies from forming. Microsoft’s promises to make key games such as Call of Duty available on more platforms haven’t swayed the FTC. Commissioners claimed the acquisition is anticompetitive in a complaint filed earlier this month.

“With control of Activision’s content, Microsoft would have the ability and increased incentive to withhold or degrade Activision’s content in ways that substantially lessen competition — including competition on product quality, price and innovation,” the complaint says.

Microsoft contests the claim that the deal would give it any sort of monopoly. Xbox and Activision, the company said Friday in a response to the FTC lawsuit, “are just two of hundreds of game publishers, who compete by providing different types of games on different platforms at different prices, ranging all the way down to $0.”A key to the legal fight? Call of Duty.“The FTC’s case is all about … one game, Call of Duty,” Microsoft President Brad Smith said during the company’s annual shareholder meeting in December.

Platforms such as Xbox and Sony’s PlayStation get revenue from Call of Duty in two ways: game sales and in-game transactions. Players can buy special weapons and gun “skins,” making it a long-term revenue source for platforms, said Joshua Foust, who has written about the video game industry and consumer identities.Sony is worried about losing this long-term revenue source if Call of Duty is no longer on PlayStation, the world’s most popular gaming console, Foust said. Sony claims Microsoft will end PlayStation’s access to the game if the acquisition goes through. Sony representatives did not respond to inquiries.Microsoft, Sony and Nintendo sometimes lock popular games down in exclusive contracts, in the hope that gamers particularly interested in, for example, Mario Bros. or The Last of Us will buy their system and not a competitor’s for access to the titles. Sony has 286 exclusive games, while Xbox has 59, Smith said. The FTC is concerned Microsoft plans to withhold Activision titles, including Call of Duty, from Sony and other competitors.In the response to the FTC filed Friday, Microsoft argues it is not financially viable to remove Call of Duty from PlayStation.

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