Microsoft says it has big plans for a new, gaming-focused mobile app store—but the whole venture hangs on its treatment by antitrust regulators.
In an interview with the Financial Times, Microsoft Gaming chief Phil Spencer said the new app store may become viable after March next year when the EU’s Digital Markets Act comes into force. The incoming law would tackle “gatekeepers” such as Google and Apple, forcing them to loosen their duopolistic grip on smartphone app distribution.
Those with long memories will recall European antitrust enforcers once forcing Microsoft to stop using its control of Windows to try to capture the browser market, and they will appreciate the irony of the company now having reason to thank the regulators for their pro-competitive actions.
However, to become truly viable, the new Xbox app store would have to have the mobile games people want to play—and that’s where Microsoft needs to get the same regulators off its back. Not for the first time, Microsoft argued that clearance of its $68.7 billion Activision Blizzard takeover would give it the titles it needs to fill (in Spencer’s words) an “obvious hole in our capability.” That means games like Call of Duty, Diablo Immortal, and Candy Crush.
British regulators in particular have already indicated that they’ll block the merger unless Microsoft cuts loose the Call of Duty franchise at the very least. Similarly, EU regulators are worried Microsoft would use its control over the popular games to disadvantage rivals such as Sony and Nintendo. Microsoft, which is already promising to give those competitors equal access to Call of Duty titles for a decade, is now attempting a clever rhetorical trick—it’s essentially arguing that letting the megadeal go through would actually be pro-competitive because it would boost competition in the mobile app distribution space.
Will the argument work? Who knows—but there are two lessons we can already take away from the saga.
First, Microsoft’s argument and plans underscore how crucial Europe is in shaping the tech space’s trajectory. The innovation may mostly take place in the U.S., but the country’s inability or unwillingness to enact meaningful tech regulation has left the field wide open for the EU and the U.K. The size of these markets make them impossible for tech companies to ignore, so the effects of regulation there are felt globally—if forced to play nicer in the EU, Google and Apple would find it extremely difficult to justify retaining heavier restrictions on their platforms elsewhere in the world.
But more broadly, the prospect of Microsoft being empowered to take advantage of a more open iOS and Android highlights the tumult that is once again characterizing the tech industry. Through a combination of regulatory action and the emergence of new technologies such as generative A.I., old fortifications are starting to crumble and new arenas for competition are opening up. And battlefield veterans see an opportunity to recast themselves as challengers.
David Meyer
Data Sheet’s daily news section was written and curated by Andrea Guzman.
