A Brighter Future for Xbox and All Gamers (Premium)

When it comes to Microsoft and Activision Blizzard, all I can do is repeat myself. This is the right thing for gamers, no matter which platforms you prefer.

It’s that simple.

21 long months after Microsoft announced that it would buy Activision Blizzard for $67.8 billion, and many, many months after two hair-brained sets of regulatory bodies decided that they would do everything they could—everything from colluding with each other, using overt stalling tactics, and inventing fantastical, evidence-free arguments that were summarily proven false in both court and the public opinion—to prevent this from happening … it’s happening. Today, Microsoft finally closed its acquisition. Activision Blizzard is part of Xbox. Queue “We Are Family” by Sister Sledge.

I want to write that this deal was inevitable. But it was everything but that, since an acquisition of this magnitude demands regulatory review on a global scale, given the scope of the business. Which explains why Microsoft initially announced what seemed like a reasonable deadline for closing the acquisition: It expected to conclude matters by the end of its 2023 fiscal year, on June 30, 2023.

How naive that we all thought that was reasonable at the time.

Challenges both real and invented emerged, a reflection of our wider problems with fake news and false facts. But the European Union (EU) provided us with an object lesson in how antitrust regulation should work by providing clarity in both schedule and decision-making, affording this acquisition the attention it deserved, and acting in the best interests of competition in its market. Microsoft responded to maturity in kind by making its concessions to the EU apply globally.

Other regulators were less professional, and less mature. Less adept.

The U.S. Federal Trade Commission (FTC) and UK Competition and Markets Authority (CMA) admitted to colluding in their demented attacks on the deal, with the former inexplicably overtly protecting a Japanese-based company, Sony, which dominates the console market, from its uncompetitive U.S.-based rival. And both regulatory bodies invented a non-existent future market for game streaming to justify their attempts to block the deal, as if they were policing “future crimes” from Minority Report. Imagined future crimes.

By the time that 11 regulatory bodies representing 27 countries worldwide had already approved the deal, the FTC was finally challenged in federal court. And it was then that the hollowness of its lies was laid bare for all to see.

“There are no internal documents, emails, or chats contradicting Microsoft’s stated intent not to make Call of Duty exclusive to Xbox consoles,” U.S. District Court Judge Jacqueline Scott Corley wrote in a scathing put-down of the FTC’s final legal appeal. “Despite the completion of extensive discovery in the FTC administrative proceeding, including the production of nearly 1 million documents and 30 depositions, the FTC has not identified a single document which contradicts Microsoft’s publicly stated commitment to make Call of Duty available on PlayStation (and Nintendo Switch).”

The FTC’s argument was always ridiculous, but the CMA made that regulatory body look like the annual meeting of Mensa’s best. And in the wake of the FTC’s defeat, it bobbed, weaved, and stumbled drunkenly in pursuit of a face-saving maneuver that would make it appear to be acting on behalf of the best interests of its constituents despite all the evidence to the contrary. And faced with this final, bizarre hurdle, Microsoft finally did what was retrospectively obvious: Instead of offering meaningful concessions that made sense, it instead offered the ridiculous and nonsensical. It would address the CMA’s concerns about the UK market for cloud gaming by offloading its unprofitable and unpopular game streaming rights to Ubisoft. A company from France. Naturally, the CMA accepted this arrangement, after stalling for another few months. And then it bragged about its bargaining abilities.

“The CMA is resolute in its determination to prevent mergers that harm competition and deliver bad outcomes for consumers and businesses,” CMA chief executive Sarah Cardell said. “We delivered a clear message to Microsoft that the deal would be blocked unless they comprehensively addressed our concerns and stuck to our guns on that.”

Sure.

As I turn these events around in my mind, two thoughts emerge, two bits of logic unburdened by emotion. First, there was never any rational reason—legal or logical—to prevent Microsoft from acquiring Activision Blizzard, and even those who may have disagreed when I first made that assertion have since seen the evidence, thanks to those embarrassing FTC hearings. And second, as noted above, the regulators in the European Union, in particular outgoing competition commissioner Margrethe Vestager, have emerged as responsible and credible. The CMA’s Ms. Cardell and Lina Khan of the FTC should take note: This is how it’s done.

“Some people think that agencies should either block or clear mergers, nothing in between,” Ms. Vestager said during a May speech after her agency had approved the acquisition and the CMA had not. “So if you block you are a ‘tough’ enforcer, if you clear, well, let’s just say you are not perceived as tough. That is not our policy. The European Courts have held that we cannot, as a matter of principle, dismiss remedy proposals. We have to investigate the merits of every solution offered.”

And so, she sought concessions, which Microsoft immediately agreed to. To this, she said, “These types of remedies are the minority of our cases, by far. But when they work, why deprive ourselves of the option? This is what useful enforcement is all about.”

Yes, it is.

And with all that nonsense out of the way, we can now look forward to a much brighter future for Xbox as a business and ecosystem, but also a much brighter future for gamers. And I know some still don’t believe this, and that they will point to every Xbox exclusive coming down the pike as evidence to the contrary while ignoring Sony’s much worse behavior in this regard. But that sentiment is true for those who play outside of Xbox too. Categorically, Activision Blizzard’s games will be available to more gamers in more places than was ever the case when that company was independent. That’s literally why this deal was approved. Everywhere.

I love Phil Spencer and what he’s done for Xbox. But I think we have to credit Brad Smith for this win. Granted, they both share one common trait, and it’s something I’d like to see elsewhere at Microsoft, a relentless drive to do the right thing. Winning, in its context, is a win-win. Something we don’t typically see in video games, go figure.

The future of Xbox, finally, is bright. We all win.