The Competition and Markets Authority (CMA) decided to investigate the $69 billion merger due to many concerns, including the impact of competition in the console, game streaming, and subscription areas, among others. Microsoft just issued its reaction to the CMA’s decision.
If the acquisition is authorized, Microsoft will not be able to add Call of Duty to Game Pass due to “previous agreements” between Activision and Sony, as alluded to in a tweet by Phil Spencer and referenced in the footnote.
Activision Blizzard is unable to post Call of Duty titles on Game Pass for a certain number of years due to constraints in the agreement between the two companies, as noted in the footnote.
The regulatory board is embracing [Sony’s] objections without the required amount of critical assessment, according to Microsoft, which has criticized the move to broaden its probe into the company’s proposed acquisition of Activision Blizzard.
If the deal goes through, Call of Duty, which is consistently the best-selling console game of the year, might end up on Microsoft’s subscription service, undercutting Sony’s full pricing for the game.
There is growing evidence that this won’t happen for some time, even if the merger does take place. During the PS4 generation, Sony and Activision engaged in a co-marketing agreement for the mega-franchise, and that partnership has continued to the present day, with this year’s Call of Duty title getting PlayStation-exclusive bonuses.
In a lengthy explanation of why it decided to broaden its investigation, the CMA stated its worry that PlayStation and other gaming subscription services would suffer if Microsoft made Activision Blizzard content exclusive to its platform.
The government agency worries that Microsoft would exploit this material to undercut competitors in the game-streaming market like Amazon and Nvidia.
The CMA concluded that “there is a genuine potential of a substantial decrease of competition (SLC) in gaming consoles, multi-game subscription services, and cloud gaming services,” and so the matter should be referred to a more in-depth phase 2 inquiry.
As the gambling sector continues to consolidate, antitrust regulators throughout the world are now examining the potential purchase.
The CMA has appointed a separate panel to conduct a more in-depth study into the merger and determine whether or not it will substantially diminish competition as part of phase two of its probe.
If the CMA believes that adequate action has not been taken to mitigate a reduction in competition, it may prevent a merger or acquisition from going forward.