Microsoft: UK market watchdog concerns over Activision acquisition are misplaced

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Microsoft cites in several statements the concerns of the British market watchdog CMA about the proposed acquisition of Activision Blizzard. The criticisms would be misplaced and the government agency would have adopted Sony’s views too easily.

In a document addressed to the Competition and Markets Authority, Microsoft cites several reasons why the second phase of the anticompetitive investigation should not have been initiated, such as quotes After the experiences from the first study the competition authority decided to launch a second, more detailed investigation.

For example, Microsoft argues that PlayStation as a game platform is twice as large as Xbox and is therefore not harmed by the acquisition of Activision Blizzard; a point that is currently being considered by the CMA. Microsoft writes: “The suggestion that the incumbent market leader could be overthrown by the third-largest party with its clear and persistent power as a result of losing access to one game title is implausible.”

The Xbox maker is referring to the Call of Duty franchise. One of the main points of the discussion surrounding the Activision Blizzard acquisition is the availability of Call of Duty on PlayStation consoles. According to Xbox CEO Phil Spencer, the game will remain available on Sony’s consoles, but even if it weren’t, Microsoft says it would not pose a threat to Sony. Microsoft cites the redacted number of active PlayStation users playing a Call of Duty game for this argument: “Even without all those players, the number of players on PlayStation would be significantly higher than on Xbox.”

Another reason the CMA has launched the second phase of its acquisition investigation has to do with Xbox Game Pass. According to the market watchdog, Microsoft can exert too much influence on competition with its market share in the cloud gaming segment. The government body did not see Microsoft’s appeal to the presence of competition from Amazon Luna and Google Stadia as sufficient. Microsoft responds: “Consumer adoption of cloud gaming remains low. Blocking rival services would significantly hinder the adoption of this technology.”

The CMA is expected to issue a preliminary conclusion to phase two of the investigation in January 2023, as well as possible solutions to disputed issues. The British watchdog is not the only party investigating the consequences for competition in the game world. Brazilian watchdog CADE approved the acquisition in early October while the European Commission and the FTC are reportedly conducting an investigation. Microsoft’s acquisition of Activision Blizzard was approved by concerned shareholders at the end of April. Nearly $69 billion would be paid for the acquisition.

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