Microsoft tries to pre-empt the regulators by guaranteeing COD will stay on PlayStation

Microsoft’s takeover of Activision Blizzard is not yet a done deal, and one hurdle it has to clear is an antitrust investigation: the U.S. Federal Trade Commission will be having a good kick of the tyres on what would be the biggest acquisition in the company’s history. The FTC has under the Biden administration promised to toughen-up on its policing of such deals, and most notably intervened in Nvidia’s ill-fated attempt to acquire Arm.

If there’s one thing that the bean-counters at Redmond don’t like, it’s regulators. So in an unsurprising move, Microsoft has pre-empted many of the big questions raised by the acquisition and given the kinds of assurances that government will want to hear. The snappily titled blogpost Adapting ahead of regulation: A principled approach to app stores by president and vice chair Brad Smith outlines Microsoft’s commitments in light of increasing regulatory concern around app stores, access, and payments.

The commitments are split into four key areas and, of course, take some lessons from Epic’s recent battle against Apple, most notably when it comes to payment methods. Here’s the lot:

Quality, Safety, Security & Privacy

• We will enable all developers to access our app store as long as they meet reasonable and transparent standards for quality and safety.
• We will continue to protect the consumers and gamers who use our app store, ensuring that developers meet our standards for security.
• We will continue to respect the privacy of consumers in our app stores, giving them controls to manage their data and how it is used.

Accountability

• We will hold our own apps to the same standards we hold competing apps.
• We will not use any non-public information or data from our app store to compete with developers’ apps.

Fairness & Transparency

• We will treat apps equally in our app store without unreasonable preferencing or ranking of our apps or our business partners’ apps over others.
• We will be transparent about rules for promotion and marketing in our app store and apply these consistently and objectively.

Developer Choice

• We will not require developers in our app store to use our payment system to process in-app payments.
• We will not require developers in our app store to provide more favorable terms in our app store than in other app stores.
• We will not disadvantage developers if they choose to use a payment processing system other than ours or if they offer different terms and conditions in other app stores.
• We will not prevent developers from communicating directly with their customers through their apps for legitimate business purposes, such as pricing terms and product or service offerings.

The post also addresses two of the most prominent questions about the proposed acquisition.

“First, some commentators have asked whether we will continue to make popular content like Activision’s Call of Duty available on competing platforms like Sony’s PlayStation. The obvious concern is that Microsoft could make this title available exclusively on the Xbox console, undermining opportunities for Sony PlayStation users.

“To be clear, Microsoft will continue to make Call of Duty and other popular Activision Blizzard titles available on PlayStation through the term of any existing agreement with Activision. And we have committed to Sony that we will also make them available on PlayStation beyond the existing agreement and into the future so that Sony fans can continue to enjoy the games they love. We are also interested in taking similar steps to support Nintendo’s successful platform. We believe this is the right thing for the industry, for gamers and for our business.”

Hard to say fairer than that: Although the more suspicious-minded will point out that this is exactly what any company trying to push through a $68.7 billion deal would say.

(Image credit: Microsoft)

The second question is basically that these principles don’t immediately apply to the existing Xbox console store, which is very much a walled garden. Microsoft says, fairly reasonably, that the big regulatory concern is about marketplaces on PCs, mobiles, and general purpose computing devices. “These platforms have become essential to our daily work and personal lives; creators cannot succeed without access to them.”

Game consoles by contrast are a smaller and more specialised market: “Gaming consoles, specifically, are sold to gamers at a loss to establish a robust and viable ecosystem for game developers. The costs are recovered later through revenue earned in the dedicated console store.”

Nevertheless Microsoft says it will be working to implement principles 1 through 7 on the Xbox store (basically, everything except the bit about developers using their own payment system) while “closing the gap” on the others. “In doing so, we will incorporate the spirit of new laws even beyond their scope,” claims Smith.

Finally, there are some additional commitments relating to the fact that Microsoft has a store, but also makes the operating system that nearly everyone on PC uses. Essentially it’s saying it will never force developers or users to use its own app store and always allow alternatives.

• We will continue to enable developers to choose whether they want to deliver their apps for Windows though our app store, from someone else’s store, or “sideloaded” directly from the internet.
• We will continue to give developers timely access to information about the interoperability interfaces for Windows that our own apps use.
• We will enable Windows users to use alternative app stores and third-party apps, including by changing default settings in appropriate categories.

This is, of course, something of a little mating dance from Microsoft. It faced serious government scrutiny in the 1990s and ever since has been viewed with suspicion by regulators around the globe—sometimes fairly, and sometimes less so. Don’t underestimate how seriously Microsoft has to take this stuff: The antitrust lawsuit it faced back then initially saw the company ordered to break up, before a successful appeal brought a lesser penalty.

The mood music around the Activision Blizzard deal has been surprisingly upbeat so far: We spoke to Gene Munster, a big-shot banking analyst, who reckoned that there would be some theatrics but ultimately the deal will happen.

“I think there’s going to be some drama. In the end, I think the deal gets done … and part of the reason is, I think that a lot of the saber rattling that we’ve heard from Capitol Hill over the past two years, I think it’s been off base… these big tech companies, despite frustration from many about the kind of wealth that they’ve created for themselves, I think that they are ultimately making consumers’ lives better.”