Microsoft's Brussels Presentation: A Strategic Move with Little Substance

Microsoft's recent presentation in Brussels was a masterclass in stage management, with the company making a compelling case for its acquisition of Activision Blizzard. The European Commission, a significant regulatory hurdle, was the target of this impressive PR blitz. Microsoft reiterated its commitment to multi-platform releases, including a ten-year pledge to launch Call of Duty titles on Valve's Steam and Nintendo platforms. Additionally, Microsoft president Brad Smith unveiled a potential deal with Sony, which would presumably grant the company the same concessions. However, this move may be seen as a strategic distraction from the core concerns surrounding the deal. The Communication Workers of America union's unusual intervention, implying that Activision Blizzard is a poor employer and that the deal should be approved, has raised eyebrows. Meanwhile, Microsoft's announcement of a deal with Nvidia has eliminated opposition from the chip-maker, potentially the most impactful development of the week. This agreement allows Xbox titles on the GeForce Now cloud gaming platform, which may be perceived as a concession on the game subscription services front. Nevertheless, it remains to be seen whether the European Commission will be convinced by Microsoft's arguments. The company has garnered positive headlines across the political and technology press, but the concession to Nvidia may be less significant than it initially appears. In reality, it is a restoration of the former status quo, with no significant impact on Microsoft's bottom line. The deal does not address concerns about Game Pass' potential dominance in the game subscription market, which is the primary concern for regulators. Microsoft's strategy has been effective in shifting the narrative, with the company starting the week with three major industry peers opposing the deal and ending with only two. The announcement of deals with Nintendo, Valve, and Nvidia has made Sony appear increasingly intransigent, both to the public and regulators. Remarkably, Microsoft has achieved this without undermining the value it seeks from the deal. The company's negotiators may have pulled off a significant coup if regulators accept these deals as sufficient concessions. However, this may not be a desirable outcome for the industry, as it could lead to a future where Game Pass becomes too established, leaving publishers with no choice but to accept Microsoft's terms. The UK's CMA remains a significant hurdle, having identified game subscriptions as a competitive sector of concern. Microsoft's core argument is solid, but its narrow focus on console hardware and software sales may not fully address the concerns of regulators. The question of Game Pass' potential moat and its impact on the industry remains a pressing concern, and regulators must consider the implications of this deal on the future of gaming.