Microsoft promises openness on new App Store as it seeks approval for Activision

The principles are a response to concerns raised by app developers and lawmakers, who say the App Store and other digital ones operated by Apple Inc. unfairly take large cuts in revenue and undermine competition. Microsoft said it would not require developers to use a proprietary payment system, among other steps.

Brad Smith, the company’s president, said, “We’re more focused on adapting to regulation than fighting against it.” He and Chief Executive Satya Nadella met with reporters in Washington, D.C. on Wednesday before meeting with reporters and others about the Activision deal.

Officials told reporters on Wednesday that the principles would also help Microsoft offer its new gaming store on devices where it might not be today. For example, Apple’s iPhone doesn’t allow a competing App Store, which the company says helps protect users’ security and privacy.

In January, Microsoft announced its largest acquisition of all time for Activision for $75 billion. The deal, which is subject to regulatory approval, will help strengthen the company’s subscription gaming service, called Game Pass. The service provides a list of games for the users to play for a monthly fee. With Activision, Microsoft will get access to hugely popular franchises like Call of Duty and World of Warcraft.

The US Federal Trade Commission will review the deal. Since taking office last summer, FTC Chair Leena Khan has sought to increase the investigation into the acquisition. The Wall Street Journal has reported that the agency will look into whether the Activision deal could reduce competition in the gaming market.

The deal fits with Microsoft’s move to buy more studios that can fit in Game Pass. Since Mr. Nadella took over as CEO in 2014, Microsoft has spent more than $10 billion to buy more than a dozen game studios, including Doom and Elder Scrolls franchise owner ZeniMax Media Inc last year. The acquisition was made for $7.5. Arab.

Microsoft executives expressed confidence Wednesday that the Activision deal would pass regulatory muster, though they acknowledged it was being proposed in an environment of heightened scrutiny of the market power of large technology companies.

Microsoft has said the deal will make it the third largest company in the global videogame market that includes games, subscriptions, gaming-specific hardware and other revenue sources.

In “times of traditional antitrust”, Mr Nadella said, “being No. 3 in a highly fragmented market only in terms of content would not be as interesting to anyone.”

Antitrust enforcers may take a brief view of the market, concluding that Microsoft’s market share is larger than the company states.

Previewing the arguments Microsoft is making to regulators, Mr Nadella said the acquisition will benefit consumers, thanks to the company’s vision of making games playable on any device. “There are going to be more options,” he said.

He added that such changes would also benefit game developers.

“There isn’t just one app store through which they have to reach users,” Mr Nadella said, especially on mobile devices. And if regulators question the impact on labor markets, he said, “in the gaming industry, we are a preferred employer.”

The app-store principles outlined by Microsoft will eventually apply to stores on its Windows operating system, Xbox gaming consoles, and any future app stores the company creates.

“We’re building a universal store for games,” said Sarah Bond, corporate vice president at the company’s Xbox business. The idea is that the store will be widely accessible, allowing players to access games on a variety of devices, she said.

That kind of product may violate Apple’s App-Store rules. With Wednesday’s announcement, Microsoft appeared to be taking another step in a campaign to pressure Apple to change its policies. Microsoft was a supporting witness to Epic Games Inc. in a recent lawsuit from that company that accused Apple of anti-competitive conduct.

Microsoft has also backed legislation under consideration by Congress that would force Apple to loosen some of its app-store restrictions, including allowing consumers to load other app stores onto the iPhone and iPad. Apple has lobbied against the bill, which a major Senate panel approved last week.

Apple did not respond to a request for comment. The Wall Street Journal reported that in the past, Apple warned policymakers that attempts to open-source their platform would evade the company’s privacy and security protections.

Mr Nadella said the new Universal Store would allow players to buy one game, as many do today, or buy a Netflix-style subscription to gain access to multiple games: “It’s kind of renting vs. buy.”