The British competition authority Competition & Markets Authority (CMA), like the European Commission, has concerns about the takeover of Activision Blizzard by Microsoft. This goes out a statement from the authority on their so-called phase 1 decision. This states that in the phase 2 investigation that is now to follow, the authority wants to examine two possible problems in particular, which damage competition between companies in the games sector and thus bring disadvantages for players in the long term, such as higher prices, less choice or poorer product quality could.
First, the CMA wants to investigate whether Microsoft’s acquisition of Activision Blizzard could give Xbox an unfair advantage over Sony’s Playstation. It would be conceivable, for example, that Microsoft in the future Call of Duty or other major games that belong to Activision Blizzard’s game catalog would no longer be published for the Playstation or platforms of other competitors. The Playstation could become so much less attractive than the Xbox.
In addition, it is to be examined whether the takeover of Activision Blizzard by Microsoft will mean that the Redmond-based company could dominate the growing area of cloud gaming in the future without significant competitive pressure from other providers. Again, the CMA fears that Microsoft may deny other cloud gaming providers access to Activision Blizzard’s games catalogue.
Microsoft has released a four-page statement in response, in which the company frontally attacks the CMA’s preliminary decision. The authority’s concerns are unfounded and its theory as to why the merger of the companies is anti-competitive is “not supported by precedents, the economic literature or the facts”. In fact, Sony is the market leader and the market position of the Playstation is not in danger. In particular, the importance of Call of Duty for the Playstation platform is exaggerated. On the contrary, Microsoft does not intend to do without the Playstation players in Call of Duty anyway, as they enrich the community experience for all users and thus strengthen the Call of Duty brand. Likewise, the concerns about the cloud gaming market, both theoretically and factually, “also make no sense.”
The British competition authority now has until March 1, 2023 to make a final decision on Microsoft’s acquisition of Activision Blizzard. After that, the companies still have the right to take legal action. However, the deal still has to be approved (among other things) by the European Commission.