UK Regulator Backs Microsoft Over Concerns on Call of Duty PlayStation. Microsoft's Merger with Activision Blizzard Gets a Boost as UK Regulator Clears Call of Duty PlayStation Concerns.
The UK’s Competition and Markets Authority (CMA) has ruled that Microsoft's proposed merger with Activision Blizzard will not result in a substantial lessening of competition in console gaming services, as it had previously feared. The regulator stated that the cost to Microsoft of withholding Call of Duty from PlayStation would outweigh any potential gains from such an action, and that the proposed merger would therefore not lead to a significant lessening of competition in console gaming services. However, the CMA will continue to investigate the merger's impact on the cloud gaming market, with a decision expected by the end of April.
On Tuesday, the UK’s Competition and Markets Authority (CMA) announced its decision regarding Microsoft’s proposed merger with Activision Blizzard. The regulator stated that it has now provisionally concluded that the merger would not result in a substantial lessening of competition in console gaming services, as it had previously feared. The CMA has also updated its financial model to account for the potential impact of a strategy to withhold Call of Duty from PlayStation, and admits that Microsoft would actually see financial losses if it were to take such an action.
CMA’s initial concerns
The CMA had originally expressed concerns over the proposed merger, fearing that it could lead to Microsoft withholding the popular Call of Duty franchise from PlayStation users. The regulator had initially concluded that a Microsoft strategy to withhold Call of Duty from PlayStation would be profitable, but it has now revised its financial model to account for the fact that Microsoft would actually see financial losses if it were to take such an action.
Microsoft’s response
Microsoft had publicly criticized the regulator’s math earlier this month, arguing that the CMA’s financial modeling was flawed. The company welcomed the CMA’s decision to update its financial model, stating that the proposed merger would provide more players with more choice in how they play Call of Duty and their favourite games.
Sony’s concerns
Sony, one of the few opponents to Microsoft’s deal, expressed concerns over the proposed Activision Blizzard acquisition and the future of Call of Duty. Sony was worried that Microsoft could raise the price of Call of Duty, make it only available on its own Xbox Game Pass subscription service, and even strategically or incidentally degrade the quality and performance of Call of Duty on PlayStation.
Microsoft has offered Sony a 10-year deal on Call of Duty, but the PlayStation maker has not yet signed the license. Sony accused Microsoft of dragging its feet and engaging only when it sensed the regulatory outlook was darkening. However, the CMA’s decision could now result in Microsoft and Sony signing a deal over Call of Duty on PlayStation.
The UK regulator has now ruled that Microsoft's proposed merger with Activision Blizzard will not result in a substantial lessening of competition in console gaming services. The CMA’s decision has been welcomed by Microsoft, which believes that the merger will provide more players with more choice in how they play Call of Duty and their favourite games. However, the CMA will continue to investigate the merger's impact on the cloud gaming market, with a decision expected by the end of April.