Microsoft’s Activision Blizzard buyout “will not result” in lessened competition – CMA concludes

Microsoft’s Activision Blizzard buyout “will not result” in  lessened competition - CMA concludes

The CMA are narrowing the scope of their investigation into Microsoft’s Activision Blizzard deal 

The UK’s Competition and Markets Authority (CMA) has today released an update on their investigation into Microsoft’s planned acquisition of Activision Blizzard, confirming their plans to release a final report on April 26th, while also declaring that the deal will not “result in a substantial lessening of competition in relation to console gaming in the UK”.

With this announcement, the CMA have confirmed that they are no longer concerned about Microsoft taking the Call of Duty franchise away from PlayStation, stating that “it would not be commercially beneficial to Microsoft to make CoD exclusive to Xbox following the deal.” As such, the CMA are now narrowing the scope of their investigation to focus more on cloud gaming, an emerging market. 

Microsoft have been adamant that they have no plans to remove the Call of Duty franchise from rival platforms, revealing plans to bring the series to new gaming platforms in order to bring the series to new audiences. Microsoft has created deals with Valve, Nintendo, Nvidia, and others to bring Call of Duty to more console and cloud gaming platforms, alleviating concerns that Microsoft’s acquisition would make Call of Duty and Xbox-only title. 

    The CMA has received a significant amount of new evidence in response to its original provisional findings. Having considered this new evidence carefully, together with the wide range of information gathered before those provisional findings were issued, the CMA inquiry group has updated its provisional findings 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 most significant new evidence provided to the CMA relates to Microsoft’s financial incentives to make Activision’s games, including Call of Duty (CoD), exclusive to its own consoles. While the CMA’s original analysis indicated that this strategy would be profitable under most scenarios, new data (which provides better insight into the actual purchasing behaviour of CoD gamers) indicates that this strategy would be significantly loss-making under any plausible scenario. On this basis, the updated analysis now shows that it would not be commercially beneficial to Microsoft to make CoD exclusive to Xbox following the deal, but that Microsoft will instead still have the incentive to continue to make the game available on PlayStation.

The CMA’s addendum to its provisional findings today relates only to competition in the supply of consoles and not to competition in the supply of cloud gaming services, where the CMA is continuing to carefully consider the responses provided in relation to the original provisional findings. The CMA’s merger investigation continues, and it remains due to issue its final report by 26 April 2023.

Microsoft’s Activision Blizzard buyout “will not result” in  lessened competition - CMA concludes

As it stands, it seems likely that Microsoft will receive approval from the UK to acquire Activision Blizzard, though it remains to be seen if other authorities will approve. 

Both the UK and EU plan to reveal their final decisions before the end of April, making next month a pivotal time for Microsoft. 

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