CMA Details Issues Over Microsoft’s Acquisition Of Activision Blizzard; Microsoft Responds

Paul David Nuñez October twelfth, 2022 – 11:49 AM

Today, the Competition and Markets Authority particulars its considerations over Microsoft’s Activision Blizzard acquisition following the launch of a second, deeper antitrust investigation. This comes after Brazil accredited the deal. The UK regulator is worried that the deal will hurt PlayStation and different multi-game subscription choices as Microsoft could withhold Activision Blizzard content material from them. The CMA can also be involved that Microsoft will out-compete rivals resembling Google, Amazon, and Nvidia within the recreation streaming house by utilizing Activision Blizzard alongside different Microsoft companies. Since the CMA’s points had been revealed, Microsoft has issued a response.

“There is a realistic prospect of a substantial lessening of competition in gaming consoles, multi-game subscription services, and cloud gaming services,” the agency stated in an intensive doc. The CMA believes that the acquisition of exclusives like Call of Duty and different potential exclusivity on Xbox will create a sizeable community impact on Microsoft’s platform. A community impact is the place a console with a number of players attracts extra content material, which in flip attracts extra players.

“The CMA is concerned that having full control over this powerful catalogue, especially in light of Microsoft’s already strong position in gaming consoles, operating systems, and cloud infrastructure, could result in Microsoft harming consumers by impairing Sony’s – Microsoft’s closest gaming rival – ability to compete as well as that of other existing rivals and potential new entrants who could otherwise bring healthy competition through innovative multi-game subscriptions and cloud gaming services.”

Subscriptions are one of many key elements of the CMA’s considerations. They imagine it’s potential (even possible) that with out this deal, Activision Blizzard video games could have to return to different subscription companies, too. “The CMA recognises that ABK’s newest games are not currently available on any subscription service on the day of release but considers that this may change as subscription services continue to grow. After the Merger, Microsoft would gain control of this important input and could use it to harm the competitiveness of its rivals.”

Streaming is one other key subject of the CMA’s considerations.The considerations are round Microsoft’s potential on this market as a result of its possession of the Azure cloud gaming service, plus its PC working system. It believes that there’s an opportunity this, coupled with the possession of Activision Blizzard, will give Microsoft an “unparalleled advantage” over different cloud streaming suppliers.

Microsoft considers these considerations as flawed as the corporate presently doesn’t use Azure and doesn’t stream from PC {hardware}. “There is no advantage,” the corporate stated. “Indeed, Xbox considers that it faces a number of significant disadvantages as compared to rival providers of infrastructure for game streaming.”

Microsoft additionally responded to the CMA pondering that the deal will elevate obstacles to entry and probably foreclose’ rivals within the cloud gaming house. Recently, Google introduced that it will be sunsetting Google Stadia, its recreation streaming service in January. Microsoft insists that blocking potential rivals within the recreation streaming house runs counter to the target of creating it a profitable distribution mannequin within the first place.

“Consumer adoption of cloud gaming remains low,” it stated. “Harming or degrading rival services would significantly set-back adoption of this technology – protecting market-leading incumbents (i.e., Sony on console, Apple and Google on mobile, as well as Steam on PC). Xbox, as a platform which is in last place in console, seventh place in PC and nowhere in mobile game distribution globally, has no incentive to do this – instead its incentive is to encourage the widespread adoption of cloud gaming technologies by as many providers as possible to encourage the major shift in consumer behaviour required for cloud gaming to succeed.”

Regarding the affect the deal may have on PlayStation, Microsoft stated that these considerations are ‘misplaced’. “These unsupported theories of harm are not sufficient to justify a reference to Phase 2,” Microsoft stated.

In an announcement shared with Gamesindustry.biz, Microsoft argued: “The suggestion that the incumbent market leader, with clear and enduring market power, could be foreclosed by the third largest provider as a result of losing access to one title is not credible.”

Microsoft posited that if each Call of Duty participant on PlayStation moved to Xbox, “the PlayStation gamer base remaining would be significantly larger than Xbox”. Microsoft additionally mentioned the extent of content material obtainable on PlayStation. According to Microsoft, there have been over 280 first and third-party unique titles on PlayStation in 2021, which was practically 5 occasions as many as Xbox.

“In short, Sony is not vulnerable to a hypothetical foreclosure strategy, and the Referral Decision incorrectly relies on self-serving statements by Sony which significantly exaggerate the importance of Call of Duty to it and neglect to account for Sony’s clear ability to competitively respond,” Microsoft added. “While Sony may not welcome increased competition, it has the ability to adapt and compete. Gamers will ultimately benefit from this increased competition and choice.”

Microsoft argues that bringing Activision Blizzard’s video games to Game Pass, which is the corporate’s huge motivation behind the deal, would supply players extra alternative in how they entry content material. Microsoft believes that with the continued reputation of conventional ‘buy to play’ and free-to-play fashions implies that Game Pass will all the time face robust competitors. Microsoft concluded this space of the CMA’s considerations by saying that if players do select to go away PlayStation for Xbox, it will likely be as a result of Xbox is providing alternative in its method to how video games may be purchased.

“Should any consumers decide to switch from a gaming platform that does not give them a choice as to how to pay for new games (PlayStation) to one that does (Xbox), then that is the sort of consumer switching behavior that the CMA should consider welfare enhancing and indeed encourage. It is not something that the CMA should be trying to prevent.”