Microsoft has gained an advantage over rivals Sony over the Activision-Blizzard acquisition deal as the UK’s CMA sided with them in issues over games consoles.
The UK's Competition and Markets Authority (CMA) has preliminarily sided with Microsoft over the controversial Activision-Blizzard acquisition deal. The news was revealed in a release by the CMA this morning (March 24), and is sure to boost Microsoft's ambitions of gaining a larger foothold in the gaming industry.
Microsoft and Sony PlayStation have been trading blows with each other over the controversial deal. Sony believes that if the deal goes through, Microsoft will block the release of Call of Duty titles on PlayStation. Claiming the deal goes against the spirit of competition, the Japanese tech giant has been actively protesting against regulators allowing the deal to go through.
CMA disregards Sony's concerns over the PlayStation and console exclusivity
The CMA had originally concluded that an attempt by Microsoft to maintain console exclusivity of the Call of Duty franchise would be profitable. Microsoft opposed the regulator's statements publicly, claiming the regulator didn't use the right financial model to draw the conclusion. According to Microsoft, the CMA used a financial model which compares five-year gains to one-year losses. Microsoft criticized the model, arguing it had "clear errors" which skewed results in favor of Sony's claims.
The regulator then came out with a statement siding with Microsoft, brushing off any concerns over console exclusivity. According to the regulator, the cost of withholding the Call of Duty franchise from PlayStation would outweigh any competitive benefits derived from the deal.
“Having considered the additional evidence provided, we have now provisionally concluded that the merger will not result in a substantial lessening of competition in console gaming services because the cost to Microsoft of withholding Call of Duty from PlayStation would outweigh any gains from taking such action"
Concerns over Activision-Blizzard deal's impact on cloud gaming
The UK-based regulator maintains that it still has concerns over the deal's impact on the cloud gaming market. The regulator has revealed that it is still investigating concerns over the Activision-Blizzard deal's influence on the cloud gaming market. The investigation is set to reach a conclusion by the end of April.
“Our provisional view that this deal raises concerns in the cloud gaming market is not affected by today’s announcement. Our investigation remains on course for completion by the end of April.”
Microsoft has been signing several cloud gaming deals for its Xbox PC games and the Game Pass subscription service. These deals have been criticized as a shallow an effort to win over regulators that have been critical of these concerns. Microsoft's cloud gaming deals include 10-year deals with Boosteroid, Ubitus and Nvidia. These deals will allow Xbox PC games to run on the providers' cloud gaming platforms. The Activision-Blizzard deal is the biggest takeover in the history of the Gaming Industry. As a result, it also faces scrutiny from the EU's regulatory authorities. Investigations are ongoing with these authorities but the deal is expected to go through if the EU clears it of any regulatory violations.
Microsoft and Sony could reach an agreement over Call of Duty on PlayStation
The CMA brushing off concerns over Call of Duty's console exclusivity status is likely to push Sony to strike a deal with Microsoft. Microsoft has been vocal about its intentions to come to an agreement with Sony over the franchise's availability on PlayStation. As a result of the CMA's findings, the ball is now in Sony's court to come to an agreement with its rivals.
Sony's opposition to the deal hinges on the fact that the Call of Duty franchise is one of the most popular ones in the industry. It plays a major role in driving console sales for both companies. Microsoft has already struck a deal with Nintendo over Call of Duty on Nintendo consoles.
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