Japan drops Microsoft/Activision Blizzard antitrust case as lawmakers scrutinize the Japanese games market

Activision-Blizzard CEO Bobby Kotick released a memo to his staff (and everyone else around the world) last night about the ABK substack (which exists), and while most of it is a repetition of the arguments he already made TV has raised with regulators and so on, there are some points worth noting in the current political context.

“We remain confident that the transaction will ultimately be approved,” he says, retracting some of his insults to skeptics by saying that “regulators who were initially concerned about console competition are beginning to understand our industry better. He’s also issuing another round of dings against Sony, which, to be fair, has spent most of its airtime over the past few months beating Microsoft in a transparent attempt to block the Activision-Blizzard buyout.

“You may have seen statements from Sony, including an argument that if this deal goes through, Microsoft may intentionally release ‘flawed’ versions of our games on PlayStation. We all know that our passionate gamers would be the first to blame Microsoft for delivering on its promises of content and quality. And all of us who work so hard to deliver the best games in our industry care too much about our players to ever release sub-par versions of our games. Sony even admitted that they’re not actually worried about a Call of Duty deal – they’d just like to prevent our merger from happening. [Editor’s note: He’s referring to this Jim Ryan statement.] This is obviously disappointing behavior from a partner for almost thirty years, but we will not allow Sony’s behavior to affect our long-term relationship. PlayStation players know that we will continue to deliver the best possible games on Sony platforms, as we have done since PlayStation launched.”

Kotick concludes the letter with a reference to the Japan Fair Trade Commission; Japanese regulators have now ruled that the Microsoft-ABK merger will not hamper competition or encounter antitrust issues, closing their investigation. But that may not have been a coincidence, as US lawmakers from both major parties have suggested Japanese companies, including Sony, are violating digital trade deals, effectively suffocating US gaming companies in the Japanese market.

Representatives of the Democratic House of Representatives from Washington (state) put a corresponding letter on the record during the most recent trade policy hearings. “Microsoft launched the Xbox in Japan in 2002 and despite 20 years of investment still only has 2 percent of the market for high-end consoles,” they wrote. “Reports have shown that Sony – which holds 98 percent of the Japanese market – has paid third-party game providers to bar access to their content and has negotiated exclusivity agreements that prevent Microsoft Xbox from hosting popular video games in Japan on their system .” They urged US Trade Representative Katherine Tai to “seek consultations with Japan to address this issue.”

Republican and Democratic senators brought the same statistics to a Senate Finance Committee hearing last week; One senator accused the Japanese government of “allowing it[ing] Sony will engage in flagrantly anti-competitive behavior through exclusive deals and payments to game publishers and establish games that are among the most popular in Japan – and not distribute games on other platforms.”

In other words, it looks like Kotick’s uncomfortable nationalist appeal on TV last month did its job.

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