Microsoft Responds to UK Regulator’s ‘Misplaced’ Concerns Over Activision-Blizzard Megadeal; States that Sony Still Has the Ability to Adapt and Compete

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The UK Regulator (CMA) has expressed its concerns over the planned Microsoft Activision-Blizzard deal and Microsoft has now issued statements.

Last month, the Competition and Markets Authority (CMA) said that the proposed acquisition of Blizzard-Activision by Microsoft might lead to competition concerns, and a more in-depth review was announced. “Following our Phase 1 investigation, we are concerned that Microsoft could use its control over popular games like Call of Duty and World of Warcraft post-merger to harm rivals, including recent and future rivals in multi-game subscription services and cloud gaming”, the CMA said last month.

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Fast forward one month, and the UK regulator has now detailed its concerns in a freshly-published, extensive, decision.

“After examining a range of evidence, the CMA believes that the Merger meets the threshold for reference to an in-depth phase 2 investigation, giving rise to a realistic prospect of a substantial lessening of competition (SLC) in gaming consoles, multi-game subscription services, and cloud gaming services”, the CMA writes.

Further in the document, the CMA explains that the proposed deal could be a game-changing merger.

“Acquiring ABK would significantly expand Microsoft’s own gaming library, adding some of the world’s best-selling and most recognizable franchises, including Call of Duty, World of Warcraft, and Candy Crush”, the document reads. “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.”

The decision is an interesting read and contains more concerns from the CMA as well. After the publication of the document, Microsoft issued statements to GamesIndustry.biz, saying that the CMA’s concerns are misplaced and arguing that Sony, although it surely won’t appreciate the additional competition following the completion of the deal, it still has the ability to adapt and compete.

"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 said.

"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."

The proposed acquisition remains a hot topic for sure. Recently, the Brazilian government approved the planned merger between Microsoft and Activision-Blizzard and will be interesting to see how other regulators will handle the deal.

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