Microsoft looks to preempt Activision-Blizzard objections with new app store principles

Microsoft President Brad Smith speaking at the 2019 GeekWire Summit. (GeekWire Photo / Dan DeLong)

Can a big tech company simultaneously run and participate in an online marketplace in a way that’s fair to third parties who use the platform themselves? That is a core question at the heart of antitrust inquiries into Amazon, Apple, Google and others, and Microsoft is now trying to thread the needle on its own.

The Redmond company Wednesday morning issued a series of “Open App Store Principles” for its Windows Store and its future games marketplaces, seeking to preempt one of the likely regulatory objections to its pending $68.7 million acquisition of video-game giant Activision Blizzard.

The principles include a pledge by Microsoft to hold its apps to the same standards as competing apps, and to avoid using any “non-public” information or data to give its own apps an edge.

“This regulatory process begins while many governments are also moving forward with new laws to promote competition in app markets and beyond,” said Microsoft President Brad Smith in a post introducing the principles. “We want regulators and the public to know that as a company, Microsoft is committed to adapting to these new laws, and with these principles, we’re moving to do so.”

Smith and Microsoft CEO Satya Nadella spoke at a news conference in Washington, D.C., where they’re discussing the deal with lawmakers and others, the New York Times reports.

“We are proposing to write the biggest check in the history of Microsoft for $68 billion and will only be permitted to write that check if 17 governments around the world approve that transaction,” Smith said, according to the report.

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Here are the principles as announced by the company.

Quality, Safety, Security & Privacy

1. We will enable all developers to access our app store as long as they meet reasonable and transparent standards for quality and safety.

2. We will continue to protect the consumers and gamers who use our app store, ensuring that developers meet our standards for security.

3. We will continue to respect the privacy of consumers in our app stores, giving them controls to manage their data and how it is used.

Accountability

4. We will hold our own apps to the same standards we hold competing apps.

5. We will not use any non-public information or data from our app store to compete with developers’ apps.

Fairness and Transparency

6. We will treat apps equally in our app store without unreasonable preferencing or ranking of our apps or our business partners’ apps over others.

7. We will be transparent about rules for promotion and marketing in our app store and apply these consistently and objectively.

Developer Choice

8. We will not require developers in our app store to use our payment system to process in-app payments.

9. We will not require developers in our app store to provide more favorable terms in our app store than in other app stores.

10. We will not disadvantage developers if they choose to use a payment processing system other than ours or if they offer different terms and conditions in other app stores.

11. We will not prevent developers from communicating directly with their customers through their apps for legitimate business purposes, such as pricing terms and product or service offerings.

Smith also addressed the issue of console exclusives in his post:

“To be clear, Microsoft will continue to make Call of Duty and other popular Activision Blizzard titles available on PlayStation through the term of any existing agreement with Activision. And we have committed to Sony that we will also make them available on PlayStation beyond the existing agreement and into the future 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. We believe this is the right thing for the industry, for gamers and for our business.”

One catch is that Microsoft isn’t applying all of the principles to the Xbox, only the first seven.

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In his post, Smith sought to make a distinction in his post between marketplaces on gaming consoles, specialized computing devices, and those on phones and computers, or general-purposed devices. He said the company is “committed to closing the gap” on the remaining principles for Xbox over time.

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