Good Defense Wins the Game (Premium)

With Microsoft now mounting its defense of the challenged Activision Blizzard bid, a key truth remains unchanged. There is no solid rationale for opposing this deal.

Yes, there are two sides to every story. But that doesn’t mean that both sides have merit. And in this case, it is Microsoft’s argument that rings true. And Sony’s that rings hollow.

Look, we always knew that antitrust regulators from around the globe would challenge this acquisition, and for good reason: Microsoft is willing to pay an astonishing $69 billion to gain entry into a mobile gaming market in which it has no presence today whatsoever. This is why Microsoft announced upfront that it didn’t expect to conclude the deal until the end of its 2023 fiscal year, which was 18 months away at that time.

But we also always knew that there were no valid concerns about the acquisition. That Activision Blizzard would emerge as a better company because of its new leadership. That Microsoft has already proven itself to be a credible caretaker of previously separate brands like GitHub, LinkedIn, and Minecraft. And that when the deal was finalized, Microsoft would not overtake any of the companies that currently dominate the videogame market. Instead, Microsoft will still remain well behind competitors like Sony that understandably wish to continue enjoying not just their dominance but also the abuses that helped cement their lead.

On that note, it has been interesting---and, frankly, depressing---watching regulators from the U.S., EU, and UK trip over themselves to protect this Japanese-based videogame powerhouse. This is not why any of these regulatory bodies exist: instead of protecting a dominant foreign power, they are supposed to protect competitors and/or consumers from the market abuses that occur when there is an entrenched monopoly in place in a given market. And there is one, named Sony. And when this acquisition concludes, there still will be one. Again, Sony.

There’s also an irony---OK, hypocrisy---at play here: Sony’s publicly stated fear is that Microsoft will turn crucial Activision Blizzards games or franchises into Xbox exclusives, a fear that is easily answered by regulatory bodies requiring the software giant not to do so. But that’s not really what Sony’s worried about. Instead, it is Sony that wields exclusives as a weapon to maintain its own dominance and the firm is simply not interested in tasting its own medicine. Sony doesn’t want Microsoft to do what it has been doing for decades.

Sony also argues that Microsoft “dominates” cloud gaming right now, which is one of those things that is both true and absolutely irrelevant. It’s like Apple complaining that Amazon “dominates” the market for tablets that cost less than $100 and that this is somehow a threat to the iPad. But those markets are so small as to not threaten their own dominance in the markets that matter. And in cloud gaming’s case, it’s widely understo...