Sony provides an explanation for their decision to decline Microsoft’s ‘Call of Duty’ deal

Priya Walia

Microsoft’s ongoing legal battle in the US to acquire Activision Blizzard, a gaming giant, saw Jim Ryan, the CEO of Sony Interactive Entertainment, testify in court on Tuesday. Sony Interactive Entertainment is a company that could face significant repercussions if the proposed deal is approved.

During the court hearing, Ryan explained why Sony refused to engage in the Activision deal proposed by Microsoft. The Sony executive verified his meeting with Bobby Kotick, the CEO of Activision, and conveyed that he told Kotick that the transaction possessed anti-competitive elements and hoped that the regulators would fulfill their responsibilities and block the deal.

Ryan further disclosed that Kotick aimed to safeguard his interests by establishing an extended Call of Duty agreement with Sony. Originally, Microsoft presented a 3-year arrangement to Sony, which was subsequently prolonged. What Kotick desired was to protect his position by expanding the collaborative marketing efforts between Sony and Activision in case the initial transaction fell through, Ryan elaborated.

In addition, Ryan testified during a video deposition, supporting the US Federal Trade Commission’s assertion that the acquisition of Activision Blizzard Inc. by Microsoft Corp. will negatively impact Sony Group Corp’s console business and result in a diminished gaming experience for PlayStation players.

He emphasized that the transaction would impede market competition, reinforcing the FTC’s claim. The video deposition was presented before a judge presiding over the court proceedings in San Francisco, who must determine whether to temporarily halt the deal until the legal challenges from the FTC are resolved.

Last December, the US Federal Trade Commission raised concerns about the acquisition, arguing that the $69 billion merger would negatively impact competition in the online gaming market. The sentiment was echoed by the UK Competition and Markets Authority in April.

The main point of contention revolves around Microsoft’s ownership of the Xbox gaming console brand and its extensive portfolio of game studios, such as Rare and Bethesda. With their sights now set on integrating Activision Blizzard, the development poses a considerable threat to competitors like Sony.

Furthermore, Ryan asserts that game publishers harbor a dislike for Xbox Game Pass and that Microsoft is incurring significant financial losses as a result of operating the service.