Microsoft Lays Out New App Store Rules as It Seeks Approval of Its Activision Deal
Microsoft Corp. began to make the case in Washington for its purchase of game giant Activision Blizzard Inc., laying out new data-collection, competition and payment policies for its Xbox and Windows software stores that it says address regulators’ broader concerns about rival app stores.
The company, which last month agreed to acquire Activision for $69 billion, also pledged Wednesday to keep making Call of Duty games for Sony Corp.’s rival PlayStation console even after its contractual commitment ends.
“We want to be clear with regulators and with the public that if this acquisition is approved, they can count on Microsoft to adapt to the rules that are emerging and run our business in a responsible way,” Microsoft President and Vice Chair Brad Smith said at a press event. “We’re more focused on adapting to regulation than fighting against it.”
At the briefing, Microsoft’s top executives explained the company’s app-store principles for its Microsoft and Xbox stores, where users can purchase personal-computer software as well as PC and Xbox games. They include a promise not to use any non-public data from the app store to compete with apps made by rival developers and to avoid “unreasonable preferencing our apps over others.”
Microsoft also said it wouldn’t require developers to use its payment system for in-app purchases, although that stipulation and a few others won’t initially apply to the Xbox store. Microsoft said it plans to bring those rules to Xbox over time.
Both the app store principles and the Call of Duty announcement are aimed at getting ahead of expected regulatory scrutiny of the Activision purchase, which would make Microsoft the No. 3 global gaming company. While Microsoft had previously said it would honor Activision’s deals with Sony, the company on Wednesday expanded on that. Microsoft will make the popular games available beyond the existing agreements “so that Sony fans can continue to enjoy the games they love. We are also interested in taking similar steps to support Nintendo’s successful platform,” Smith wrote in a blog post after the event.
The event, which included Chief Executive Officer Satya Nadella and Sarah Bond, an Xbox vice president, took place as lawmakers consider a bill that would place limits on app stores and force them to let users install outside apps. Microsoft has been an outspoken critic of how Apple Inc. runs its App Store.
“The open web happened, and then what happened? App stores happened, and the openness was thrown out,” Nadella said. “We’d like to get back to a place where there is an open web and there is a helpful way for new platforms to be born.”
Microsoft has already made changes to lower the fees it collects on apps, and last year said that app makers could use outside payment systems without paying a fee. But that rule didn’t apply to video games, the Verge reported at the time. The company had also released an earlier version of app store rules for its Microsoft Store on Windows in 2020.
“We recognize that there will be more scrutiny of any large acquisition that is being made by a large tech company,” Smith said. “So it really behooves us to step forward quickly and proactively and be very transparent about how we will manage this business.”
Microsoft and Apple have been engaged in a battle over rules that govern video-game sales on the iPhone maker’s ubiquitous App Store. Smith has argued that regulators should take action, and the company sent an Xbox executive to testify on behalf of Epic Games Inc., the maker of Fortnite, in a court battle with Apple over app store fees. A trial court judge ruled against Epic, which is appealing the decision.
Last month Nadella flagged the planned acquisition of gamemaker Activision Blizzard as a way to avoid paying Apple’s App Store commission fees by attracting gamers directly to mobile games like Candy Crush.
In 2020, Smith said some app stores create a far higher barrier to fair competition and access than Microsoft’s Windows did when it was found guilty of antitrust violations 20 years ago, and he shared his concerns with the antitrust subcommittee of the U.S. House of Representatives.
Those concerns centered on Microsoft’s internet-based gaming service, sold as part of its Xbox Game Pass subscription. One app would let users pay a monthly fee to Microsoft and stream dozens of different gaming titles from the cloud, aiming to do for gaming what Netflix Inc. did for video content. But Microsoft wasn’t able to launch the service as intended on iPads and iPhones because it failed to persuade Apple to loosen App Store rules forbidding all-in-one gaming services.
Apple eventually tweaked the rules to allow Redmond, Washington-based Microsoft to sell a cloud gaming service, but each game must be downloaded separately, defeating the purpose of an all-in-one solution. Now, Microsoft is rolling out the service on Apple devices via the web, generally a much less seamless experience than an app would provide.
Microsoft Corp. began to make the case in Washington for its purchase of game giant Activision Blizzard Inc., laying out new data-collection, competition and payment policies for its Xbox and Windows software stores that it says address regulators’ broader concerns about rival app stores.
The company, which last month agreed to acquire Activision for $69 billion, also pledged Wednesday to keep making Call of Duty games for Sony Corp.’s rival PlayStation console even after its contractual commitment ends.
“We want to be clear with regulators and with the public that if this acquisition is approved, they can count on Microsoft to adapt to the rules that are emerging and run our business in a responsible way,” Microsoft President and Vice Chair Brad Smith said at a press event. “We’re more focused on adapting to regulation than fighting against it.”
At the briefing, Microsoft’s top executives explained the company’s app-store principles for its Microsoft and Xbox stores, where users can purchase personal-computer software as well as PC and Xbox games. They include a promise not to use any non-public data from the app store to compete with apps made by rival developers and to avoid “unreasonable preferencing our apps over others.”
Microsoft also said it wouldn’t require developers to use its payment system for in-app purchases, although that stipulation and a few others won’t initially apply to the Xbox store. Microsoft said it plans to bring those rules to Xbox over time.
Both the app store principles and the Call of Duty announcement are aimed at getting ahead of expected regulatory scrutiny of the Activision purchase, which would make Microsoft the No. 3 global gaming company. While Microsoft had previously said it would honor Activision’s deals with Sony, the company on Wednesday expanded on that. Microsoft will make the popular games available beyond the existing agreements “so that Sony fans can continue to enjoy the games they love. We are also interested in taking similar steps to support Nintendo’s successful platform,” Smith wrote in a blog post after the event.
The event, which included Chief Executive Officer Satya Nadella and Sarah Bond, an Xbox vice president, took place as lawmakers consider a bill that would place limits on app stores and force them to let users install outside apps. Microsoft has been an outspoken critic of how Apple Inc. runs its App Store.
“The open web happened, and then what happened? App stores happened, and the openness was thrown out,” Nadella said. “We’d like to get back to a place where there is an open web and there is a helpful way for new platforms to be born.”
Microsoft has already made changes to lower the fees it collects on apps, and last year said that app makers could use outside payment systems without paying a fee. But that rule didn’t apply to video games, the Verge reported at the time. The company had also released an earlier version of app store rules for its Microsoft Store on Windows in 2020.
“We recognize that there will be more scrutiny of any large acquisition that is being made by a large tech company,” Smith said. “So it really behooves us to step forward quickly and proactively and be very transparent about how we will manage this business.”
Microsoft and Apple have been engaged in a battle over rules that govern video-game sales on the iPhone maker’s ubiquitous App Store. Smith has argued that regulators should take action, and the company sent an Xbox executive to testify on behalf of Epic Games Inc., the maker of Fortnite, in a court battle with Apple over app store fees. A trial court judge ruled against Epic, which is appealing the decision.
Last month Nadella flagged the planned acquisition of gamemaker Activision Blizzard as a way to avoid paying Apple’s App Store commission fees by attracting gamers directly to mobile games like Candy Crush.
In 2020, Smith said some app stores create a far higher barrier to fair competition and access than Microsoft’s Windows did when it was found guilty of antitrust violations 20 years ago, and he shared his concerns with the antitrust subcommittee of the U.S. House of Representatives.
Those concerns centered on Microsoft’s internet-based gaming service, sold as part of its Xbox Game Pass subscription. One app would let users pay a monthly fee to Microsoft and stream dozens of different gaming titles from the cloud, aiming to do for gaming what Netflix Inc. did for video content. But Microsoft wasn’t able to launch the service as intended on iPads and iPhones because it failed to persuade Apple to loosen App Store rules forbidding all-in-one gaming services.
Apple eventually tweaked the rules to allow Redmond, Washington-based Microsoft to sell a cloud gaming service, but each game must be downloaded separately, defeating the purpose of an all-in-one solution. Now, Microsoft is rolling out the service on Apple devices via the web, generally a much less seamless experience than an app would provide.