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How the Microsoft-Activision merger could change the Xbox business (Protocol)

kingfey

Banned

https://www.protocol.com/newsletter...-blizzard-xbox-ftc?rebelltitem=6#rebelltitem6

THE FUTURE OF XBOX AND ANTITRUST​

Microsoft’s planned acquisition of Activision Blizzard is the largest-ever deal in the video game market by a mile. The eye-popping price, combined with the scale and scope of Microsoft’s ambitions for its gaming business, has invited a rare level of scrutiny and attention for an industry that’s largely flown under the regulatory radar.

The FTC is now in charge of reviewing the deal. With a newly empowered chair in antitrust expert and Big Tech critic Lina Khan and a Democratic majority, one big question stands out: Could the U.S. government block the deal, and on what grounds?

The chances of the FTC blocking the merger are low. Antitrust experts who I spoke with believe the deal is more than likely to succeed, but not without some strings attached.

  • “It is very unlikely” the agency will block the deal outright, antitrust expert Aurelien Portuese, who leads a competition policy group at the Information Technology and Innovation Foundation think tank, told me.
  • The combined businesses of Xbox and Activision Blizzard would only give Microsoft the No. 3 position in the gaming industry by global revenue, after Sony and market leader Tencent. “A blocked merger would be the best gift you can give to Sony or Tencent,” Portuese added.
  • “The combination of Microsoft’s experience in software with Activision's creativity would seem to be a good fit in order to challenge bigger players,” Portuese said. “I think it’s going to be very hard for the FTC to argue that there’s a fundamental dominant position that will not be challenged in the near future.”
The compromises could change the Xbox business. Microsoft has already pledged to abide by a set of app store principles it released in February, in a good faith effort designed to appease regulators. But the FTC review could ask for a wide range of remedies, starting with platform exclusivity.

  • “The one potential path to go forward is to go forward with some commitments like, ‘We won’t make XYZ content exclusive.’ They’ve said that publicly, but it’s different to get that in writing,” said Sumit Sharma, a Consumer Reports senior researcher who specializes in antitrust.
  • For instance, Microsoft has already pledged to honor Activision’s existing contractual agreements with Sony’s PlayStation platform. But statements from the company give it wiggle room to change the arrangement as it sees fit in the future. The FTC, however, could demand the company keep Call of Duty multiplatform in perpetuity.
  • “There’s always the ability for the FTC to potentially prosecute Microsoft for violation of the consent decree or even to unwind the merger,” Portuese said. He added that the FTC could do regular checks to ensure the company is abiding by the terms.
The labor question looms large. Although not strictly an antitrust concern, Activision Blizzard’s ongoing labor crisis could become entangled with the FTC review, and it’s not clear right now to what extent Khan and her Democratic majority will take workers’ rights issues into account.

  • The deal was instigated in part because of damning media reports about Activision Blizzard CEO Bobby Kotick’s knowledge of the company’s harassment and discrimination problem.
  • A group of four U.S. senators called the deal a “cynical and ‘opportunistic’ attempt to capitalize off the systemic issues coming to light at Activision Blizzard,” in a letter urging the FTC to investigate.
  • Workers themselves are speaking out, too. “We believe that the impacts on workers need to be taken into account, and if a deal is bad for workers, it should either be blocked or made to include enforceable commitments to respect workers' rights,” said Activision Blizzard design researcher Brice Arnold during an FTC and DOJ listening forum earlier this month.
  • The FTC is said to be taking into account “the combined companies’ access to consumer data, the game developer labour market and the deal’s impact on those workers who have accused Activision of discrimination and a hostile workplace,” The Information reported in April.
  • “How should we consider data in these big mergers?” Sharma asked. ”If there’s a big merger where there’s lots of data to be pooled, how should we consider whether this would give them market power, and can that be exploited? These are definitely questions that are being asked.”
Although experts think the deal will make it through, these questions and many more could define the future shape and power of the Xbox platform. For now, Microsoft is preparing for a lengthy back-and-forth that could last well into next year, with a deal-closing target deadline of June 2023.

“It’s moving fast, at least fast enough for an acquisition of this size,” Microsoft President Brad Smith said of the deal’s timeline in an interview last week with Belgian business publication L’Echo. “One of our attorneys summed it up nicely by saying, ‘We’re coming to the end of the beginning, and now we’re entering the beginning of the middle,’” Smith said, adding that the company will “respect the process.”

“I think it’s going to be a detailed review, it will take a fair amount of time,” Sharma said. “Microsoft has learned from its past and has become much better at dealing with regulators and competition authorities both in Europe and the U.S.”
 

kingfey

Banned
“There’s always the ability for the FTC to potentially prosecute Microsoft for violation of the consent decree or even to unwind the merger,” Portuese said. He added that the FTC could do regular checks to ensure the company is abiding by the terms.
This part seems to be interesting. Wonder, what would happen, if MS changes their promises? Would the ftc actually unwind the purchase?
 

kingfey

Banned
Nah they'll just fine them and Nadella will reach into his pocket and toss them a few billion.
I doubt that would be the case. The ftc currently is under facebook noises, due to the purchase of WhatsApp.
If the FTC deems MS actions to be harmful to the competition, they might annoy them, like they are doing now to Facebook.
 
The platform exclusivity stuff is going to be a wild run for the long run. Current assumption, for example, is that non-Warzone CODs will be exclusive to Xbox/PC starting in 2024. And I think most people on both sides have come to terms with that. But if the FTC can really be to that what the MLB League is to The Show, we really could be looking at COD staying multiconsole for a much longer time.

In that case I can see MS's plans for it changing (if they were at one point considering indeed locking it down to Xbox and PC) and bringing it to the Switch as well because by that point, why not? It's basically forced to be multiconsole anyway, might as well bring it to even more platforms like the Switch.

I think the FTC would only be considering that for the big revenue-generating IP, though, probably to ensure industry revenue isn't being adversely affected or something like that? Stuff like Crash, Spyro, Tony Hawk, even Guitar Hero (considering how dormant that's been) etc.? I don't think the FTC would care if MS made those exclusive or not.
 
This part seems to be interesting. Wonder, what would happen, if MS changes their promises? Would the ftc actually unwind the purchase?
It all depends on the promise and first and foremost, FTC cannot unwind the merger. They have to go to the court first and court should accept FTC's arguments and allow to proceed.
And let's be honest there - they even have trouble with Facebook, much less with arguing in the court regarding games.

In that case I can see MS's plans for it changing (if they were at one point considering indeed locking it down to Xbox and PC) and bringing it to the Switch as well because by that point, why not?
I am think potentially cloud version of Warzone is coming to Switch. It is F2P and Fortnite cloud seems to be working good.

I think the FTC would only be considering that for the big revenue-generating IP, though, probably to ensure industry revenue isn't being adversely affected or something like that
Considering that there are exist Fornite, GTA, FIFA etc. FTC would not look at COD at some kinda of holy grail that cannot be make exclusive. Especially when Warzone 2 will stay on other platforms anyway.

We should also add to that we are arguing about the exclusivity against a single platform - Playstation. Because Switch does not get those games in the first place and PC will get them Day 1 anyway. So I don't see FTC building a case against Microsoft if Microsoft will make mainline COD exclusive.
 
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That entire idea is just such a can of worms for the industry.
True. Because essentially it would lead to a situation that no game can be made exclusive for example. Or there will be fine for the past and current exclusivity deals, breaking the contracts etc. So I don't think FTC will bother. The whole argument is about mainline COD - as Warzone 2 stays on Playstation, I don't believe courts (and FTC for that matter) will entertain the idea to hold a hearing over COD exclusivity semantics (which COD is the real COD and so on)
 
After the initial hyperbole of MS having unfettered control over gaming its going to be hard for the FTC to even demand MS keep COD multiplatform.
It sounds stupid to demands the number 3 company allow its product on the number 2 company's console, but not having any demands on the number 2 company to put their products on the number 3.
When you put it together, it's gonna seem stupid, and infact anticompetitive, to demand that of MS.
 

IntentionalPun

Ask me about my wife's perfect butthole
True. Because essentially it would lead to a situation that no game can be made exclusive for example. Or there will be fine for the past and current exclusivity deals, breaking the contracts etc. So I don't think FTC will bother. The whole argument is about mainline COD - as Warzone 2 stays on Playstation, I don't believe courts (and FTC for that matter) will entertain the idea to hold a hearing over COD exclusivity semantics (which COD is the real COD and so on)
Right, you get into crazy semantics.. if they do something like that I would love to see how that agreement is actually codified lol How do you account for all the possible platforms? Force shitty ports to any company selling a gaming device? Not like they are going to codify into law that MS is forced specifically to release on Playstation.

Anything is possible I'd just be surprised.

Whereas MS agreeing not to pull existing products from platforms is far more likely.. something MS can agree to that they'd never do anyways, and make the FTC happy.

In the end, MS may strategically want to keep some products fully multi-platform.. they aren't black or white with it. But they will want to avoid having that agreed to with a federal authority who can sue or even charge them w/ crimes if they violate it.
 
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I find it hard to believe the FTC will take that much of a look at game exclusivity especially w/ MS being able to argue nothing they make is really exclusive.

That entire idea is just such a can of worms for the industry.
Yeah same here. Doubt there will be any look at XYZ content exclusivity. Maybe something else, like making promises in connection with workers rights or changes to app store policies.
 
Whereas MS agreeing not to pull existing products from platforms is far more likely.. something MS can agree to that they'd never do anyways, and make the FTC happy.
I mean, yeah. Why would Microsoft bother to remove the released games from PSN? People will continue to buy them and Microsoft won't need to do anything.

making promises in connection with workers rights
The thing is FTC is not designed to deal with that. Senators are trying to push their bill (whether it is passes or not is another matter), but current FTC does not have mechanism or rules to deal with worker rights. Not to mention MS was ranked first as the best place to work so...

If eventually, you mean like in 4-5 years then maybe.
We know that MW2, Warzone 2 and next COD is coming to Playstation due to contractual obligation. So until 2024 at least nothing will change much.
 
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jshackles

Gentlemen, we can rebuild it. We have the capability to make the world's first enhanced store. Steam will be that store. Better than it was before.
After the initial hyperbole of MS having unfettered control over gaming its going to be hard for the FTC to even demand MS keep COD multiplatform.
It sounds stupid to demands the number 3 company allow its product on the number 2 company's console, but not having any demands on the number 2 company to put their products on the number 3.
When you put it together, it's gonna seem stupid, and infact anticompetitive, to demand that of MS.
If there's an actual court ruling on this, it's likely that the precedent will mean the end of all game exclusivity.

I'm not even sure what that would look like. Will indie developers that release hentai cat girl games on Steam be required (or legally compelled, even) to simultaneously release a version for PlayStation, Xbox, and Nintendo? If Nintendo, for example, doesn't want hentai cat girl games on their platform will they be legally required to carry it anyway? Maybe it will be based on the game's budget? Audience? Some other arbitrary factor? Will the US legal system actually make a ruling on what the difference is between a AAA and AA video game?

None of this shit would make sense.
 
Nah....Microsoft worked too hard to build up positive goodwill with the government after they were almost split up. Nadella isn't going to cash in any of that for Xbox.
The biggest acquisition in Microsoft's entire history as a company is the Activision deal so...
 

kingfey

Banned
The biggest acquisition in Microsoft's entire history as a company is the Activision deal so...
Microsoft don't want to broken to pieces.
There is a reason why they are cuzzy with ftc.

Plus they themselves want to build new Market with their windows store. So keeping ftc happy, is their best interest.
 
Nah they'll just fine them and Nadella will reach into his pocket and toss them a few billion.
They don't even need to do that as FTC has no real ground against them.

Microsoft don't want to broken to pieces.
There is a reason why they are cuzzy with ftc.
Has nothing to do with that. FTC has trouble with much more egregious Facebook and unable to win against Apple/Google ecoystem control (which ironically what DOJ and co. fought against Microsoft 20 years and at that time it was just a simple browser that did not even include monetization or app store at all).

People overestimate what FTC can do.

Microsoft worked too hard to build up positive goodwill with the government after they were almost split up.
Yeah, certainly FTC, DOJ and the government will go into the court fight over a military shooter :messenger_tears_of_joy:
 
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Topher

Gold Member
After the initial hyperbole of MS having unfettered control over gaming its going to be hard for the FTC to even demand MS keep COD multiplatform.
It sounds stupid to demands the number 3 company allow its product on the number 2 company's console, but not having any demands on the number 2 company to put their products on the number 3.
When you put it together, it's gonna seem stupid, and infact anticompetitive, to demand that of MS.

Heaven forbid we expect Microsoft to keep their word. Otherwise we can excuse all transgressions for the sake of the console war.
 
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Heaven forbid we expect Microsoft to keep their word. Otherwise we can excuse all transgressions for the sake of the console war.
It's not about Wether MS keeps its word with honouring existing contracts with Sony, or if in the future they keep COD on PS, it's the picture of the government compelling a lesser market player to provide their biggest IP for their main competitor, who is also bigger than them, whole making no similar demands on the bigger player.
It's an anticompetitive demand no matter what way you look at.

Now what do I personally think is going to happen?
COD Warzone will remain on PS as it needs as many people playing as possible.
COD campaigns will remain on PS with MS banking on it coming to GP as a good enough lure to get people into the Xbox ecosystem.
Any other online multiplayer game will also be on PS.
Any other IP will be exclusive to Xbox.
 
Another point, if anyone thinks that the recent news of how MS knocked back the Marvel games and how MS also didn't want to get KOTOR (A Star Wars game) after all this time, has in no way anything to do with this FTC investigation you are kidding yourself. Sony thinking MS is in there saying how Sony has major Star Wars games that xbox players can t get, when they already had it (in other words it was taken away from them just like COD could be by MS) and how Spiderman used to be on Xbox but Sony took it away, makes the move of putting it out in the public during the hearing time that MS could of had them but passes.
 

S0ULZB0URNE

Member
The FTC, however, could demand the company keep Call of Duty multiplatform in perpetuity.
“There’s always the ability for the FTC to potentially prosecute Microsoft for violation of the consent decree or even to unwind the merger,” Portuese said. He added that the FTC could do regular checks to ensure the company is abiding by the terms"

 

Goalus

Member
The FTC, however, could demand the company keep Call of Duty multiplatform in perpetuity.
“There’s always the ability for the FTC to potentially prosecute Microsoft for violation of the consent decree or even to unwind the merger,” Portuese said. He added that the FTC could do regular checks to ensure the company is abiding by the terms"
Sounds like a hassle.
 
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Mattyp

Gold Member
Microsoft don't want to broken to pieces.
There is a reason why they are cuzzy with ftc.

Plus they themselves want to build new Market with their windows store. So keeping ftc happy, is their best interest.

Microsoft, Apple, Google are never going to be broken to pieces by the US government that nonesense thought needs to stop. They all supply military contracts, they cop some fines to show face but the US enjoys the top software companies in the world being US based, and would do nothing to weaken that to other countries.
 

Topher

Gold Member
It's not about Wether MS keeps its word with honouring existing contracts with Sony, or if in the future they keep COD on PS, it's the picture of the government compelling a lesser market player to provide their biggest IP for their main competitor, who is also bigger than them, whole making no similar demands on the bigger player.
It's an anticompetitive demand no matter what way you look at.

Now what do I personally think is going to happen?
COD Warzone will remain on PS as it needs as many people playing as possible.
COD campaigns will remain on PS with MS banking on it coming to GP as a good enough lure to get people into the Xbox ecosystem.
Any other online multiplayer game will also be on PS.
Any other IP will be exclusive to Xbox.

No, it would be a matter of the government compelling Microsoft to hold to what Microsoft said they were going to do in statements to the government. What I think is going to happen is COD, in its entirety, will remain on PlayStation but there will be major incentives for gamers to play on Xbox. That's smart and it keeps Microsoft in line with their commitments to the FTC. Also, backing COD on PS down to only Warzone would be PR disaster after their public comments on the matter.

Another point, if anyone thinks that the recent news of how MS knocked back the Marvel games and how MS also didn't want to get KOTOR (A Star Wars game) after all this time, has in no way anything to do with this FTC investigation you are kidding yourself. Sony thinking MS is in there saying how Sony has major Star Wars games that xbox players can t get, when they already had it (in other words it was taken away from them just like COD could be by MS) and how Spiderman used to be on Xbox but Sony took it away, makes the move of putting it out in the public during the hearing time that MS could of had them but passes.

None of that has anything to do with mergers and acquisitions so no, it isn't a concern for the FTC investigation.

Microsoft, Apple, Google are never going to be broken to pieces by the US government that nonesense thought needs to stop. They all supply military contracts, they cop some fines to show face but the US enjoys the top software companies in the world being US based, and would do nothing to weaken that to other countries.

Yes, but being a government contractor doesn't have anything to do with it. Those companies will not be "broken to pieces" because they are not violating anti-trust laws. The FTC is not going to back down from acting against a US company simply because the US does business with them.

 
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No, it would be a matter of the government compelling Microsoft to hold to what Microsoft said they were going to do in statements to the government. What I think is going to happen is COD, in its entirety, will remain on PlayStation but there will be major incentives for gamers to play on Xbox. That's smart and it keeps Microsoft in line with their commitments to the FTC. Also, backing COD on PS down to only Warzone would be PR disaster after their public comments on the matter.
MS has the right to change their mi d with what they do with their own IP.
They can say they don't have any plans to take it off PS, but plans change.
Unless it is written into the decree then MS are free to do what they like, and PS owners crying because they can't play COD anymore isn't a big deal.
For the government to write it into the decree then yes, it absolutely looks anticompetitive and is forcing a smaller market player to put their IP on the bigger market players device, at the expense of the smaller player. You can throw up about what MS said their intents were, but forcing a company to do that is a totally different issue.
It would be like the government saying that Disney must put their Star Wars series on Netflix, but Netflix doesn't have to do the same thing. It's bullshit no matter how you try to package it up.

The FTC doesn't concern itself with exclusives at all. None of that has anything to do with mergers and acquisitions.
So then the FTC doesn't care if Microsoft makes COD exclusive to the Xbox and PC? Cool. Let's hope you are right.
 
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Topher

Gold Member
It would be like the government saying that Disney must put their Star Wars series on Netflix, but Netflix doesn't have to do the same thing. It's bullshit no matter how you try to package it up.

The government isn't going to go around making demands unless it has a reason.....such as mergers and acquisitions.

So then the FTC doesn't care if Microsoft makes COD exclusive to the Xbox and PC? Cool. Let's hope you are right.

Obviously they care about it in the context of this acquisition. I reworded my post to be clearer before you replied, but it is a bit telling that you hope Microsoft removes COD from PlayStation. Unfortunately, for you, but fortunately for gamers overall, I think you will be disappointed.
 
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12Dannu123

Member
It's will impact the Xbox business. But it will. Impact the overall gaming market.

It will accelerate the consolidation of publishers, the knock on effects will be massive. It could result in PlayStation increasingly relying more on Japanese Publishers and their own first party games, Western Publishers are increasingly being bought by companies like MS.
 

Shubh_C63

Member
Ok I have a doubt.
The deal hasn't been officially done so will we see say Bethesda game showcase under Microsoft presentation or their standalone like usual ?

For E3, Sgf etc.
 
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BeardGawd

Gold Member
The platform exclusivity stuff is going to be a wild run for the long run. Current assumption, for example, is that non-Warzone CODs will be exclusive to Xbox/PC starting in 2024. And I think most people on both sides have come to terms with that. But if the FTC can really be to that what the MLB League is to The Show, we really could be looking at COD staying multiconsole for a much longer time.

In that case I can see MS's plans for it changing (if they were at one point considering indeed locking it down to Xbox and PC) and bringing it to the Switch as well because by that point, why not? It's basically forced to be multiconsole anyway, might as well bring it to even more platforms like the Switch.

I think the FTC would only be considering that for the big revenue-generating IP, though, probably to ensure industry revenue isn't being adversely affected or something like that? Stuff like Crash, Spyro, Tony Hawk, even Guitar Hero (considering how dormant that's been) etc.? I don't think the FTC would care if MS made those exclusive or not.
There's no way this deal goes through if MS isn't in control of where these games go in the future. COD isn't a requirement for a console to be successful. Just look at Switch. COD may stay multiplatform because it makes the most business sense but MS still wants to be the one making that decision.
 
Obviously they care about it in the context of this acquisition
You are playing COD on Playstation, am I right?

It could result in PlayStation increasingly relying more on Japanese Publishers and their own first party games
The question is, why would japanese publishers want to pivot to Sony considering that PS is basically dead in Japan in the first place :messenger_tears_of_joy: No japanese publisher will abandon Switch and multiplatform. Aside maybe Square Enix, but they are essentially Final Fantasy 14 company at this moment as they rely on it for their revenue.

MS would lose a load of money and the series popularity if they ever took COD away from the PS platform.
You can apply the same logic to TES or Fallout or Doom. And money is the last thing MS is concerned for now as their main goal to grow Game Pass.
 
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There's no way this deal goes through if MS isn't in control of where these games go in the future. COD isn't a requirement for a console to be successful. Just look at Switch. COD may stay multiplatform because it makes the most business sense but MS still wants to be the one making that decision.

I agree in a sense, but do you really think MS walks away from a potentially extra $8+ billion/year revenue stream just because they may have to keep COD multiplatform in perpetuity?

Considering the whole ABK acquisition is arguably more so about boosting MS's revenue from gaming operations than just securing exclusive content for Xbox or even GamePass (IMHO), I can't see how a stipulation of keeping COD multiplatform (outside of Warzone) violates that idea.

Though, hey, I don't necessarily agree with that as something the FTC should hold against MS, or agree that it's a preferred outcome especially considering some of the optics it might paint for portions of the Xbox fanbase. But it's business; business be messy sometimes.

The question is, why would japanese publishers want to pivot to Sony considering that PS is basically dead in Japan in the first place :messenger_tears_of_joy: No japanese publisher will abandon Switch and multiplatform. Aside maybe Square Enix, but they are essentially Final Fantasy 14 company at this moment as they rely on it for their revenue.

I mean in comparison to Switch yes PS is relatively "dead" but it's still tracking about on pace with PS4 sales there IIRC. It's still well ahead of Xbox in that region in spite of growth for Xbox, and while Switch is clearly ahead that market is going to contract eventually, well before PS5's. Nintendo will have to bring out a new Switch (like, an actual Switch 2) sooner or later and there's no telling what Sony does with PS in that territory between now and then.

Plus, for Japanese developers making games beyond the technical scope of a Switch, they're going to need other platforms. PS5 would be their go-to default console-wise, you may also get some additional PC support too, though.
 
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Hezekiah

Banned
No, it would be a matter of the government compelling Microsoft to hold to what Microsoft said they were going to do in statements to the government. What I think is going to happen is COD, in its entirety, will remain on PlayStation but there will be major incentives for gamers to play on Xbox. That's smart and it keeps Microsoft in line with their commitments to the FTC. Also, backing COD on PS down to only Warzone would be PR disaster after their public comments on the matter.
Yeah I think some people are significantly underestimating how badly that would go down PR wise. They'd be better off not bothering at all imo as it would look like a piss take.
 

Hezekiah

Banned
Sony considering that PS is basically dead in Japan in the first place :messenger_tears_of_joy: No japanese publisher will abandon Switch and multiplatform. Aside maybe Square Enix, but they are essentially Final Fantasy 14 company at this moment as they rely on it for their revenue.
Because Switch hardware is ancient, and because Sony might entice them to do so.

Resident Evil Village, Monster Hunter World, Street Fighter V, Persona 5 Royal, big name games which werent on the Switch (or Xbox in some cases).

Then you have other Square Enix games outside of Final Fantasy like Forspoken which will be Playstation console exclusive.
 
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After the initial hyperbole of MS having unfettered control over gaming its going to be hard for the FTC to even demand MS keep COD multiplatform.
It sounds stupid to demands the number 3 company allow its product on the number 2 company's console, but not having any demands on the number 2 company to put their products on the number 3.
When you put it together, it's gonna seem stupid, and infact anticompetitive, to demand that of MS.
This, it's nonsense. Microsoft may well decide to keep it on PS but it will be their decision.
 
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