Microsoft’s bid for Activision is undergoing regulatory scrutiny in several countries, Brazil included. Last month, Brazil’s Administrative Council for Economic Defense (CADE) prompted companies that would potentially be affected by the merger to provide their input. While Google, Apple, and other major tech companies appeared relatively neutral, Sony took the opportunity to say Microsoft’s acquisition of Call of Duty—Activision’s most popular and lucrative franchise—could “influence users’ console choice,” thus skewing the video games market.
Microsoft appears to have found incongruity in Sony’s comment. The company sent a 27-page document to CADE addressing Sony’s claim; VGC transcribed the document (originally written in Spanish) late last week.
“Considering that exclusivity strategies have been at the core of Sony’s strategy to strengthen its presence in the games industry, and that Sony is a leader in the distribution of digital games, Sony’s concern with possible exclusivity of Activision‘s content is incoherent, to say the least,” Microsoft said. “Indeed, Microsoft’s ability to continue expanding Game Pass has been obstructed by Sony’s desire to inhibit such growth. Sony pays for ‘blocking rights’ to prevent developers from adding content to Game Pass and other competing subscription services.”
Microsoft’s assertion that Sony pays developers to keep their games away from Game Pass is a bold one, but it appears to be well-founded. A screenshot of court documents from last year’s Epic Games vs. Apple lawsuit reveals that Sony pays developers to keep their games exclusive to PlayStation subscription services for variable periods of time. During the negotiated period, developers are explicitly prohibited from including their games on “competitive platforms,” including Microsoft’s Game Pass and Google’s Stadia Pro.
From Microsoft’s perspective, it’s hypocritical for Sony to criticize one company’s hypothetical removal of a franchise from a particular company’s consoles while essentially doing the same behind (mostly) closed doors. Microsoft didn’t hold itself back from expressing this, either. “Sony rails against the introduction of new monetization models capable of challenging its business model,” the company wrote in its response to CADE.
Given the ongoing nature of Microsoft’s back-and-forth with CADE, it’s unknown where Brazil’s regulatory watchdog stands on the Activision acquisition. It’s far from alone, though; verdicts in the US, UK, Australia, Japan, and other regions are still outstanding.