Sony is burning every bridge it can to counter Microsoft's Activision deal

Debates over Microsoft's $69 billion acquisition of Activision Blizzard have reached new and dramatic heights after the release of a lengthy rebuttal penned by Sony and recently shared by the UK's Competition and Markets Authority (CMA) as part of its ongoing investigation into the merger. The short version is this: Sony is now taking shots at basically everyone, including itself, in a bid to counter the deal, and Microsoft is also proudly making itself look bad.

Sony's fundamental argument hasn't changed much since the last time we heard from it. It claims that Microsoft obtaining Activision Blizzard, and the Call of Duty IP in particular, "poses a threat to an industry enjoyed by hundreds of millions" at a "critical 'inflection point' in [the industry's] evolution." Sony is seemingly referring to the new console generation as well as the recent boom of acquisitions, which it has also been a major part of, though it hasn't dropped $70 billion on somebody. 

Call of Duty is currently the central sticking point of the new stage of the CMA's investigation, so unsurprisingly it comes up about a million times here and in Microsoft's accompanying response. Sony goes as far as to say Call of Duty "is not replicable" and remains "the benchmark against which all other FPS games are measured," at one point throwing Battlefield under the bus to demonstrate that even EA, another mega-publisher, can't "produce a rival to Call of Duty." 

Consequences of Duty 

What has changed, often in hilarious ways, is Sony's salvo of supporting claims. Let's start with the argument that "consumers would be harmed," which is at least fair on its face. Sony argues Call of Duty becoming an Xbox-exclusive franchise, which it assumes to be a "short-term" consequence of this deal, would force PlayStation owners to buy "an equivalent Xbox to play this hugely popular game on their less preferred device." In the "mid-term," this would purportedly drive "a significant number of PlayStation users" to totally switch from PlayStation and PS Plus to Xbox and/or Game Pass. 

"Faced with weaker competition," Sony continues, "Microsoft would be able to: increase console and game prices for Xbox users (including those that had switched from PlayStation); increase the price of Game Pass; and reduce innovation and quality." 

For starters, it's unclear how Sony is defining "short-term" effects here. We now know that Microsoft has recently proposed a deal that would keep Call of Duty on PlayStation for up to 10 years, though Sony's response (dated October 28) specifies "only until 2027," presumably based on a prior offer. (Interestingly, it also mentions the eventual launch of the PS6 somewhere after this timeline, and Microsoft agrees new consoles aren't coming before 2028.) We also know that an existing deal between Sony and Activision will continue to keep the franchise off Game Pass for several years as well, even if Microsoft is clearly keen to bring Activision Blizzard games to the service.

In case there was any doubt on this point, Microsoft argues in its latest report: "With the Merger, Activision content will be available on at least one subscription service day and date, without the Merger, on none. This matters from a consumer welfare perspective, because the more content consumers can access through subscription services, the lower the average prices of individual games. Absent the Merger, every consumer who wants to play Call of Duty or another Activision title would need to purchase the game at full price." 

Put on your surprised face, because Microsoft claims this arrangement is "yet another example of its pro-competitive nature." Not pro-consumer, but pro-competitive. Hysterically, it then immediately claims that "in any event, the reality is that Game Pass has no market power."

That being said, I agree it is important to note that, largely due to Game Pass (and its market power), Microsoft could easily make Call of Duty more affordable or otherwise more appealing on Xbox while allowing it to stay on PlayStation platforms. Just to pull something out of the air, it could take pointers from the myriad PlayStation-exclusive content in Modern Warfare 2, which was the biggest Call of Duty launch ever on PlayStation. 

This is presumably why PlayStation Plus gets several sections in Sony's response, with the company claiming that its subscription service would, as a result of this deal, be excluded from Call of Duty opportunities and consequently weakened. Sony claims this would trickle down to independent developers as well, who would "likely receive worse terms for their content from Microsoft or even be required to promise exclusivity" due to the "weakened negotiating position" of PlayStation and PS Plus. Keeping Call of Duty on PlayStation and PS Plus is therefore "essential," Sony says, again pushing for "a commitment to equal treatment." 

The circumstances don't actually appear as dire as Sony implies, though I don't doubt Xbox will push hard for Game Pass advantages. Microsoft has claimed multiple times that it doesn't intend to hold Call of Duty hostage and would rather, as Xbox boss Phil Spencer puts it, treat it like Minecraft and make it widely available. I'm somewhat inclined to believe Microsoft on this, explicitly because the company is increasingly desperate to appease regulators like the CMA, and also because its lawyers must know the immense beating they would take in court if the company did outright block Call of Duty on other platforms, especially on the heels of tightening crackdowns on big tech mergers. Interestingly, the Minecraft comparison actually comes up here. Sony says "Minecraft is a completely different proposition" which "says nothing about "[Microsoft's] strategy with future versions of Call of Duty." 

Sony's claims about Xbox hiking prices also raise an eyebrow when you consider that it was among the earliest big names to defend $70 games for the new console generation, and just recently raised the price of the PS5 in multiple major markets. Microsoft has already admitted it may end up raising the price of the Xbox Series X | S and/or Game Pass after this holiday season, but those implied price hikes will seemingly come before this Activision deal is even scheduled to close in mid-2023 – and that's assuming smooth sailing, which clearly isn't what we've seen so far.  

We should all be more like Nintendo, really 

One of the most amusing claims Sony makes is that "Microsoft wants PlayStation to become like Nintendo" as a "less close and less effective competitor to Xbox." Sony says this deal would make Xbox a "one-stop shop" for top-selling shooters, listing Call of Duty, Halo, Gears of War, Doom, and Overwatch as examples. Which is a little odd, since Halo and Gears of War are longstanding Xbox exclusives, while Doom and Overwatch are both available on Nintendo Switch and PlayStation (though Doom studio id Software is notably under Bethesda's umbrella, which Microsoft also bought).  

"Microsoft claims that Nintendo's differentiated model demonstrates that PlayStation does not need Call of Duty to compete effectively," Sony writes. "But this reveals Microsoft's true strategy," it adds, presumably doing its best Phoenix Wright impression.

Firstly, just to get this out of the way, I'd say there are far worse things than being "like Nintendo." Secondly, Sony just bought Bungie, the creators of Halo and the caretakers of Destiny 2, which is still one of the best and biggest shooters you can play today, and the most enduring live service shooter ever. Even disregarding third-party staples like Apex Legends, PlayStation is not without shooters, and we haven't gotten to third-person shooters like The Last of Us and Uncharted. Microsoft even notes that "Sony also publishes other popular franchises with a ‘shooter’ element such as the Uncharted franchise." 

If I were Sony and I wanted more shooters, I would want to keep Call of Duty around, but I would also simply invest in more shooters, like it did with Deathloop. Amazingly, Microsoft ever so kindly suggested as much in what is arguably the funniest line in the funniest comedy available on planet Earth right now.

"If Sony no longer had access to Call of Duty (quod non), it could shift the marketing payments it has been making to Activision under the Call of Duty agreements to attract competing titles to its console, exclusively or not," the company says. "Sony could also easily increase its marketing investments in FIFA, Grand Theft Auto, another shooter franchise like Battlefield or Destiny (developed by Bungie, which Sony has recently acquired), or any other popular title to attract further subscribers to PlayStation Plus."

There ya go, Sony. Just do that! Easy. 

There's plenty more back and forth where that came from. This investigation really has brought out some of the best industry drama in recent history. Other choice comments from Sony include: "More generally, Microsoft’s past conduct shows that its public utterances should be treated with extreme skepticism." Sony is referring to Microsoft's pattern of buying studios and making their upcoming games Xbox exclusives here, but this line would fit right in at a noble trial written for a period piece. I also love the repeated digs at "an equivalent Xbox console" being a "less preferred device" for users currently enjoying Call of Duty on their god-king-of-space PlayStation console. 

It is objectively funny to see Microsoft invent new ways to make Call of Duty look worse and smaller than it actually is, including but not limited to arguing that GTA 6 is probably coming out in two years anyway so it's not like there are no other big games, guys. In its new report, Microsoft has moved on to pointing out that "Call of Duty is not the most popular franchise" and is "consistently outranked" in metrics like Metacritic scores and user rankings, not to mention "user votes of best games on PlayStation." I love it. It's like watching someone try to prove they can stretch a twin bed sheet over a California king mattress. That sheet is really starting to rip and I have a feeling Microsoft will get the staple gun out soon. 

At the same time, it is maybe funnier to watch Sony claim, in so many words, that this deal will be the horn that signals the games industry's demise. This deal undoubtedly would not close without major negative consequences for Sony and many gamers – corporate consolidation will do that, who knew – but I do have to wonder if Sony's lawyers have just been playing too much God of War: Ragnarok lately.