Microsoft is working hard to push through its pending $68 billion acquisition of Activision Blizzard. To seal the deal, it has to convince regulators around the world that its takeover of the publisher is not an example of unfair competition. A new regulatory filing reveals more details of plans Microsoft only hinted at before. According to Microsoft, its acquisition of Activision Blizzard is key to the goal of building a mobile game store to take on Apple and Google.
Among the agencies Microsoft has to convince is the UK’s Competition and Markets Authority (CMA). Microsoft mentioned its plans for mobile gaming when it talked about its “open app store” principles. In its latest statement to the CMA, Microsoft lays out how taking over Activision Blizzard will help it increase competition in mobile gaming. In order to expand the Xbox Store to mobile, Microsoft says it will need to change consumer behavior, which has entrenched the Google Play Store and Apple App Store. The content it gets from Activision Blizzard, such as Call of Duty Mobile, could help it do that.
Theoretically, an Xbox game store for mobile could provide an alternative to the established players, which are run by the companies that provide the hardware and software for smartphones. Epic Games has threatened to do something similar on occasion, but that undercuts Microsoft’s argument. Epic has control of Fortnite, which is one of the most popular games in the world. That hasn’t been enough for it to expand the Epic Store to mobile devices, though it has tried to make headway in court.
Even if Microsoft were to win approval and follow through with its mobile game store, Apple would have no interest in allowing it to operate on the iPhone — Microsoft couldn’t even get Apple to allow the Xbox Cloud Gaming app in the App Store. Google allows “sideloading” applications on Android, so Microsoft would be able to run a game store there.
Microsoft is really leaning into the mobile side of the deal. As The Verge notes, Microsoft posted a graphic on its company blog (above) showing mobile gaming as an $85 billion business, versus just $40 billion for PC and $33 billion for consoles. It’s also possible that Microsoft is choosing to focus on mobile gaming to divert attention from consoles. Microsoft contends that console gaming is trending to become a smaller part of the gaming market, but that’s what the CMA has been focused on thus far.
Sony has been coming after Microsoft, telling regulators that allowing the Xbox maker to own core gaming franchises like Call of Duty would harm competition in the console market. Sony is perhaps the biggest threat to Microsoft’s deal, so focusing on a mobile store that might not even be feasible is probably preferable.