Microsoft plans to buy Activision Blizzard for $69 billion, the largest merger ever in the gaming industry. Activision Blizzard owns well-known game series such as Call of Duty, while Microsoft is the maker of the Xbox console. If the deal is approved, Microsoft will become one of the world’s largest gaming companies.
However, the deal didn’t go well because it involved competition and antitrust issues. The UK’s Competition and Markets Authority (CMA) is one of the agencies responsible for reviewing the deal. Initially, the CMA argued that Microsoft’s acquisition of Activision Blizzard could harm competition by potentially pulling games like Call of Duty from Sony’s PlayStation console or reducing their quality and update rate on PlayStation. the CMA even recommended that Microsoft either abandon its acquisition of Activision Blizzard as a whole or the Call of Duty franchise.
However, after receiving more data and comments, the CMA changed its position last month and concluded that Microsoft’s acquisition of Activision Blizzard would not have a material impact on competition. the CMA reasoned that Microsoft has no profit motive to make games like Call of Duty exclusive to Xbox, as doing so would result in the loss of a significant number of players and revenue on PlayStation. Moreover, Microsoft has promised not to take these games off PlayStation.
This decision drew strong opposition from Sony. Sony is the maker of the PlayStation console and Microsoft’s main competitor in the gaming market. In its latest filing, Sony accused the U.K. regulator of making a “surprising, unprecedented and unreasonable” decision. Sony argues that the CMA ignored a great deal of evidence and underestimated the competitive harm caused by Microsoft’s acquisition of Activision Blizzard. Sony also cited the cancellation of the PlayStation release of Red Fall, a game originally planned for all platforms, after Microsoft acquired Bethesda as an example of Microsoft’s ability and incentive to divest acquired games from competitors.
Sony also argued that the CMA did not value Microsoft’s motivation to drop PlayStation players to increase the value of its Game Pass, saying that even subtle differences in a game’s quality across platforms can have a big impact on gamers’ choices, citing technical comparison sites like Digital Foundry as evidence.
CMA is expected to make a final decision by the end of April. In addition to the United Kingdom, the deal also needs to be approved by the European Union and the United States and other regions. It’s unclear how the deal will affect some of the highly anticipated games for 2023, such as Diablo 4.
