Microsoft top brass hold crunch talks in Brussels over £57bn Call of Duty deal

Microsoft faced a run-in with European regulators yesterday as it stepped up its fight to gain approval for the £57 billion acquisition of Call of Duty maker Activision Blizzard.

During a tense closed-door hearing in Brussels, the US tech giant insisted that the acquisition of the video game group would bring “more competition” to the market.

The last-ditch charm offensive stemmed from concerns that regulators will block the deal or require the company to sell key parts of Activision to ensure it goes through.

The acquisition would be Microsoft’s largest ever acquisition, but critics argue it would give the company too much power and crowd out competition.

The UK’s Competition and Markets Authority (CMA) has warned the takeover would lead to higher prices, fewer choices and less innovation.

A big opponent is the Japanese Sony, whose PlayStation console is the biggest rival of Microsoft’s Xbox. It wants regulators to block the merger outright.

At the hearing, a delegation of 18 senior executives, including Microsoft president Brad Smith, gaming division head Phil Spencer and Activision boss Bobby Kotick, argued for the EU’s antitrust body.

An army of about 100 lawyers, officials and critics of the deal, including Sony and Google owner Alphabet, attended the meeting.

Gaming group Valve, owner of online game marketplace Steam, and competition watchdogs from Germany, France, Italy and Spain, among others, also participated.

Smith said Microsoft wanted to “make it clear that our acquisition of Activision Blizzard will bring more games to more people on more devices and platforms than ever before.”

He said the company was more than willing to address watchdog concerns, particularly fears that it could make its most valuable games exclusive to Xbox users, excluding competitors.

Aside from Call of Duty, the acquisition gives Microsoft control of World of Warcraft, an online multiplayer fantasy game with approximately 125 million subscribers.

Such a move would provide a major boost to the company’s portfolio of successful game titles, which already includes sci-fi shooter Halo and world-building game Minecraft.

Microsoft has denied claims that it plans to make Call of Duty an exclusive. It said last night it has struck a deal with graphics card maker Nvidia to bring its titles to its streaming platform GeForce Now, knocking out a major critic of the original deal. It followed a similar deal signed with Nintendo earlier this week.

Smith said he was “more optimistic” about getting the merger off the ground after the meeting at European Commission headquarters.

He said: “We are more than willing, given our strategy, to address the concerns of others, whether through contracts, as we did with Nintendo … or through regulatory obligations.”

But the company faces an uphill battle as regulators in the UK, EU and US grow increasingly skeptical.

Earlier this month, the CMA suggested that Microsoft may need to sell the portion of Activision connected to Call of Duty as it threatened to block the merger.

When asked about the possibility of selling parts of the company, Smith said he “sees no viable path” to offload a core Activision property like Call of Duty and was not convinced that regulators would take a would make such a request. He said it was “not feasible” to demolish such a building.

Both UK and European regulators will make a final decision in April. In the US, the Federal Trade Commission is engaged in a legal battle to block the transaction.

Regulators are concerned that Microsoft’s post-merger dominance could also affect the cloud gaming market – a type of service that allows players to stream games over the Internet without discs or downloads in a manner similar to Netflix’s TV shows and movies .

Sony’s opposition was also unlikely to abate, but Smith said he hoped the parties would eventually “reach a deal.”