Microsoft’s Activision Blizzard deal won’t affect console competition, CMA says
The UK’s Competition and Markets Authority has softened its stance on Microsoft’s proposed $70 billion acquisition of Activision Blizzard in an update to its provisional findings. The new stance of the major regulator is that the deal is unlikely to affect competition in the gaming console space.
The CMA previously said that Microsoft’s takeover of Activision Blizzard could harm gamers, in the first draft of its provisional report released last month. At the time, the regulator said it had “provisionally concluded that Microsoft’s proposed acquisition of Activision could result in higher prices, fewer choices, or less innovation for gamers.”
Now, thanks to a series of deals made by Microsoft ahead of meetings with regulators, it seems like the acquisition is likely to pass the hurdle presented by the CMA’s scrutiny. The regulator said in a new report that it had received “a significant amount of new evidence” in response to its earlier report, and that it was now convinced competition in the console gaming space wouldn’t be harmed.
“The CMA inquiry group has updated its provisional findings,” the regulator said in its updated report, “and reached the provisional conclusion that, overall, the transaction will not result in a substantial lessening of competition in relation to console gaming in the UK.”
The CMA says that the biggest piece of evidence received was in relation to Microsoft’s incentive to make games like Call of Duty exclusive to its Xbox platform. New data provided to the CMA, including data on purchasing behavior of Call of Duty players, showed that making the series exclusive to Xbox would “be significantly loss-making under any plausible scenario.”
Now, the regulator is convinced that, with this new data and the previous deals to bring Call of Duty to Nintendo, NVIDIA, and more, Microsoft will likely continue to make the game available on PlayStation consoles. This finding could change by the time the CMA hands down its final report, but it’s looking good for Microsoft so far.
That said, the CMA still has some concerns about the impact of the deal, mainly in the cloud gaming space. It noted multiple times in its provisional report, explanatory memorandum, and press release that its concerns that Microsoft could monopolize the cloud gaming industry had not been altered by the changes to its stance on console gaming.
Cloud gaming is a smaller market, and there’s likely to be much less pushback from other cloud gaming companies than there has been from Sony. Microsoft has already signed contracts with NVIDIA, Ubitus, and Boosteroid to bring Call of Duty and other Xbox games to their cloud gaming platforms. Other than that, there aren’t really many cloud gaming providers left, with Amazon Luna and PlayStation’s PS Plus streaming all that really remains.
The CMA will hand down its final report on the matter on or before April 26, 2023, where it’s expected the acquisition will be approved. The European Commission is reportedly likely to approve the deal too, leaving just the FTC in the US as the last major regulator standing in opposition.
