Microsoft’s last-ditch effort to avoid an Federal Trade Commission lawsuit over its $69 billion Activision-Blizzard deal included an offer to enter a legally binding consent decree to make “Call of Duty” available on rival consoles for 10 years, the company’s president and vice chair, Brad Smith, said Tuesday morning.
Smith, answering a shareholder’s question during Microsoft’s annual meeting, said the company proposed the consent decree before FTC commissioners met with the company last week.
The FTC announced its formal opposition to the deal on Thursday afternoon, putting the dispute in the hands of an administrative law judge. Announced earlier this year, the deal would be the biggest acquisition in the company’s history. Activision-Blizzard is the gaming giant behind such franchises as “Warcraft,” “Call of Duty” and “Candy Crush.”
“I’m disappointed that the FTC didn’t give us the opportunity to even sit down with the staff to even talk about our proposal, to even see if there was a solution there,” Smith said. “… If there’s one thing we all know, whether you’re a government, or a business, or a parent talking to your children, you will never solve a problem if you don’t try.”
The FTC declined to comment directly on Smith’s remarks, but sent a general statement from Holly Vedova, director of the agency’s Bureau of Competition: “The Bureau’s long-standing policy is that we are always willing to consider remedy proposals that are put on the table in the course of our investigations and litigations.”
Microsoft has offered Sony a 10-year agreement to continue making “Call of Duty” available for PlayStation and its PlayStation Plus subscription service. Microsoft also announced a deal last week to bring “Call of Duty” to Nintendo if the Activision deal goes through. “Call of Duty” isn’t currently available for Nintendo Switch.
In coming out against the deal last week, the FTC said Microsoft’s “past conduct” following its $7.5 billion acquisition last year of Bethesda Game Studios parent ZeniMax Media made Microsoft’s current commitments in the Activision-Blizzard acquisition unreliable, “despite any assurances the company may offer regarding its plans.”
Microsoft disputed the FTC’s characterization of its commitments and actions in that prior acquisition.
“Call of Duty,” one of the most successful game franchises in history, is a key asset in the proposed Activision acquisition, and a major sticking point in the regulatory review in the U.S. and overseas.
“The reality is, in the console market, every company wants to have some titles that are exclusive, because that’s how you build loyalty. Today, Sony has 286 exclusive titles. Xbox has 59,” Smith said Tuesday morning. “So an administrative law judge is going to have to decide whether going from 59 to 60 is such a danger to competition that he should stop this from moving forward.”
Smith characterized that danger as theoretical, saying that Microsoft “has said explicitly in a variety of ways” that it won’t make “Call of Duty” exclusive to Xbox.
In addition to raising regulatory concerns, Microsoft says making “Call of Duty” exclusive would be a financial blunder, taking away key revenue and creating a PR nightmare, alienating a large group of loyal fans.
Updated at 1:43 p.m. with FTC comment. Identification of Brett Iverson corrected since publication.