Microsoft is trying to convince regulators for its massive deal with Activision Blizzard – KION546

By Brian Fung, CNN

Microsoft is trying to persuade regulators to approve its Acquisition of $68.7 billion Activision Blizzard with a series of new app store commitments it says will put the company “on the right side of history” as policymakers around the world debate new laws to force the opening up of competition in digital markets.

the Commitment in 11 pointsannounced on Wednesday, includes promises from Microsoft to allow third-party app stores on its platforms and not to give preferential treatment to its own games published on company-operated digital marketplaces. Microsoft also pledged to let software developers use whatever payment system they prefer rather than requiring them to use Microsoft’s proprietary channels.

The commitment not only covers the Activision Blizzard deal, but virtually all of Microsoft’s gaming business going forward, including metaverse platforms, CEO Satya Nadella and Chairman Brad Smith told reporters on Wednesday. a visit to Washington, DC.

The announcement is a centerpiece of Microsoft’s presentation to antitrust regulators to bless the Activision Blizzard merger – the biggest in the company’s history. The deal focuses antitrust scrutiny on a tech giant that has so far avoided much of the criticism and skepticism that has been leveled in recent years at other Silicon Valley giants, including Apple, Facebook and Google.

It also reflects an effort by Microsoft to get ahead of legislation that targets the biggest app store operators.

“We want to be competitive. We want to compete for users; we want to compete for publishers,” Nadella told reporters. “I want us to approach this in a principled way where we build our platforms, our technology, so that we’re on the right side of history.”

The announcement comes amid a global toll on app stores, as software developers have railed against what they say are high store fees and draconian policies that hurt consumers. These tensions culminated most visibly in a lawsuit by Epic Gamesthe maker of “Fortnite,” v. Apple – litigation that Microsoft argued with a court friend who filed positions against the iPhone maker.

As part of Wednesday’s pledge, Microsoft promised that video games produced under its own banner – including titles it plans to acquire from Activision Blizzard such as “Call of Duty” – will not benefit. preferential treatment on its application stores compared to competing games. It also said it would not use data collected from App Store activity to compete with developers. And he added that Microsoft would not prevent app makers from contacting their users directly with information on pricing or product offers.

These commitments reflect a stark contrast to the policies and practices of some other tech giants that have come under fire. A key complaint against Google, for example, is that it has ranked or prioritized its own apps and services higher in search results. Apple and Google have lobbied against congressional legislation to force open US app stores, saying the proposed new rules could harm user safety. (On Wednesday, Microsoft said apps on its platform should still pass “reasonable” security reviews.)

Separately, Microsoft said it has made a commitment to Sony that the popular franchises it acquires from Activision Blizzard will remain available on PlayStation under Activision’s existing agreement with Sony, and that he offered to extend the deal on a ‘multi-year basis’. The existing deal with Sony runs until 2024, Smith said.

The commitments will take effect immediately on Microsoft’s Windows Store, Smith said, while a smaller subset will initially apply to the Xbox Store before expanding to include all 11 principles. All of the principles will also apply upon the launch of an upcoming app store that Microsoft is developing, which executives have dubbed a “universal store.”

“This store will allow people to connect on all devices, all over the world,” said Sarah Bond, one of Xbox’s top executives.

Try to get ahead of the exam

This landmark merger comes as regulators around the world rethink how competition laws apply to the digital world. Just a few years ago, Activision Blizzard’s deal wouldn’t have garnered much attention, said Smith, who added that the acquisition would make Microsoft the world’s third-largest games publisher after Tencent. and Sony.

“Regulators aren’t usually very concerned about a company becoming number three,” Smith said. “But we are not in the world of 2018 or 2019, we are in 2022. And we recognize that there will be greater scrutiny of any major acquisition made by a large technology company. So I think it’s really incumbent on us to move forward quickly and proactively and be very transparent about how we’re going to run this business, with a clear eye on the competition law issues and the responsibilities that we have.

In addition to the deal’s impact on video game players and app stores, regulators could analyze the merger’s effect on competition in labor markets, Nadella acknowledged — an area in which US regulators have shown growing interest. This may be particularly relevant in light of recent reports of Sexual Harassment and a Toxic Work Environment at Activision Blizzarda crisis that Nadella said Microsoft may seek to resolve once Activision Blizzard meets its existing public commitments on the matter.

Nadella argued that the merger is pro-competitive from a labor perspective because Microsoft “is a preferred employer” among people who work in games.

“So if you want to even take a much broader view and say, ‘What does this do to people who are employed in the gaming industry? working in the gaming industry, is another element that will serve us well as we go through the review process around the world.

Microsoft last week filed formal documents with the Federal Trade Commission to initiate the merger review process and delivered an initial briefing to FTC staff, Smith said.

Wednesday’s commitments will be implemented whether Activision Blizzard’s deal closes or governments around the world succeed in passing app store legislation, Smith said.

“It’s going to be the right thing for players and our employees, and it’s a clear message to regulators that we’re looking at and adapting to the kinds of issues they want to address,” Smith said.

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