Microsoft and Sony’s squabbling over Call of Duty is hard to watch

Activision Blizzard’s outspoken chief communications officer, Lulu Cheng Meservey, decided last week that it was time for the gloves to come off in the battle of words with Sony over Microsoft’s proposed acquisition of her employer (as if the gloves had ever been on in the first place). You can follow @ActivisionBlizzard on Twitter she quoted PlayStation chief Jim Ryan directly as saying, “I don’t want a new Call of Duty deal. I just want to block your merger.” Meservey said Ryan spoke these words at the Feb. 21 meeting between interested parties in the deal and the EU’s antitrust regulator.

It was shocking but not shocking. It was shocking that Meservey was willing to break the gentleman’s agreement to keep what was said at the meeting confidential. And it was shocking that, if he was indeed quoted accurately, Ryan was willing to state his company’s position so baldly.

Meservey can be a doubtful witness. Meservey is likely to have a significant financial interest as a senior Activision executive in the transaction’s success. She is also very much a post-Trump communicator, unafraid to look like a bad guy and wield tweets like deadly weapons in the name of “honesty.” As such, she is a useful attack dog for Microsoft, which can maintain the air of gentlemanly largesse it has attempted to project throughout its wrangles with Sony and regulators, and leave it to her to go places it would never dare itself.

But — and here is the not-shocking part — the words Meservey put in Ryan’s mouth are nothing if not an accurate description of Sony’s stance. A deal to protect Call of Duty’s place on PlayStation is on the table from Microsoft, and it’s apparently good enough for Nintendo and Nvidia. Sony has never expressed any desire to negotiate for further concessions. Instead, it wants to make use of its power with regulators in order to prevent a deal that would greatly benefit its competition. It will fight tooth and nail to take its rival’s legs out and cost them money, as any business in its position might. It would be naive to think that Microsoft wouldn’t do the same.

Photo: Nicolas Peeters/Melting Prod/Microsoft

This is all, broadly, fair enough, by the rules of the game: That’s capitalism! The trouble is that the regulators — the European Commission, the U.K.’s Competition and Markets Authority, and the U.S. Federal Trade Commission — have allowed their own political interest to drag them, Sony, Microsoft, and Activision Blizzard into an unseemly spectacle that is only doing reputational damage to all involved, that is wasting vast amounts of time and money, and that is actively harmful to the game industry that it is supposed to be protecting.

There is a common political consensus in America, the U.K. and Europe that the technology giants Google and Microsoft must be limited. This is hard to disagree with; there’s understandable regret that deals such as Meta’s (then Facebook’s) acquisitions of Instagram and WhatsApp were allowed to go through. So Microsoft has a target on its back, and the enormous $68.7 billion price tag it put on Activision Blizzard has inevitably drawn the regulators’ attention.

The argument that the deal will reduce gaming competition is weak and based on an extremely narrow view of the game industry. Call of Duty and Warcraft are as powerful as Call of Duty. Candy CrushThere isn’t a place in the world that Microsoft could acquire them. In an industry in which titans like Epic Games or Tencent are able to reach the top of their revenue charts, Microsoft cannot acquire them. (Now, if Microsoft had moved to buy Epic — makers of the dominant game engine, Unreal, as well as one of the most popular games, Fortnite — that might have been a deal worth examining.) Regulators didn’t understand this, though, and so have allowed themselves to be unduly swayed by Sony’s arguments about Call of Duty’s influence in the console market, which are, at best, a distraction from more valid concerns, like Microsoft’s early lead in subscriptions and cloud gaming.

Sony’s case rests on its own conception of games as a product business, where jealously gatekeeping intellectual property is the standard modus operandi. Microsoft, however, has demonstrated for over a decade its ability to think about games differently. Take a look at how it handles MinecraftNo regulators tried to force Microsoft to sign legal agreements for the game to remain on Nintendo and PlayStation. And yet, nine years later, there it remains, because it’s in Microsoft’s interest to keep it there. The same is true of Call of Duty, as Valve boss Gabe Newell pointed out when he confidently dismissed Microsoft’s offer of a 10-year deal to keep it on Steam as unnecessary. At this level, a game’s value is in the size of the audience it captures, not in its usefulness as a marketing lure for a console that isn’t even that central to Microsoft’s business plan. Microsoft has long been pushing the platform-agnostic gaming vision under Phil Spencer. This has led a reluctant Sony to take part in initiatives like cross-platform gaming. Fortnite Other games.

Image: Mojang/Microsoft

Sony, however, is not a multi-track thinker. Perhaps that’s what led it to what will hopefully be the nadir of this sorry campaign. Last week’s submissions to UK regulators showed that Sony suggested that Microsoft might deliberately cripple PlayStation with performance or bugs if they did release Call of Duty. As well as irresponsibly stoking console-warrior conspiracy theories, this absurd claim is disrespectful to Call of Duty’s developers, to the entire industry — and, frankly, to the regulators themselves, if Sony thinks they are credulous enough to believe the industry and community of games operate this way.

Or maybe they’re not. But this claim — that its competitor might disable its own product out of spite — does nothing if not expose the weakness of Sony’s own argument and the schoolyard level of the rhetoric being used. Microsoft was complicit in this. Microsoft did not appear to have any choice but to show its support for the claim. Microsoft showed off that it had a printed copy of the offer made to Sony at the February 21st meeting in Brussels. This circus is doing no one in the video game industry any favors, and it’s probably pointless, too. The regulators must know their antitrust case is not strong in this instance, and having extracted some “behavioral remedies” (an odd term that makes legally binding business contracts sound like the naughty step) from Microsoft, they will likely fold. The EU is likely to be the first one to go.

Although it might seem strange that Microsoft would be rooting for an 11-figure takeover, Activision Blizzard’s purchase of Microsoft is likely to have a net benefit for gamers. Activision Blizzard is a horribly run company, where the ruthlessness of Bobby Kotick’s leadership team is grinding its creative workforce into dust. The collapse of Blizzard is especially apparent. After the appalling revelations of the California lawsuit about its “frat boy” culture, the studio was in a fragile rebuilding phase when news of a shockingly bad all-hands meeting leaked, in which president Mike Ybarra took a callous line with restive employees that was surely received from above. You can see the fault lines in Blizzard’s recent releases: the misconceived, perfunctory Overwatch 2and predatory monetization Diablo Immortal.

Microsoft has not had a perfect record in taking over studios. Take the example of Lionhead’s disastrous handling that led to its closing. The labor neutrality agreement that Microsoft signed last year with Communications Workers of America would represent a real sea change for Activision Blizzard employees and could trigger a positive ripple effect throughout the industry. To put it another way: Wouldn’t you rather have Phil Spencer as your boss than Bobby Kotick?

It’s time to stop the squabbling and posturing and let Microsoft complete this deal. That choice is in the regulators’ hands. They must approve any deal if they are to protect the integrity of the media and preserve the health and well-being of the video game industry.