The UK’s competition regulator, the Competition and Markets Authority, has decided that Microsoft’s $70 billion acquisition of Activision Blizzard could harm competition in the video game market, and deserves a thorough investigation.
Concluding its Phase 1 investigation, CMA explicitly outlined its concerns that the deal could harm competition not only in the market for game consoles, but in youth markets for cloud gaming and subscription services, In which Microsoft has taken an early lead. The CMA will move to a more thorough Phase 2 investigation until Microsoft and Activision Blizzard can prove within the next week that there is no competition risk in the UK.
CMA highlights “a realistic possibility of significantly lower competition” […] in gaming consoles, multi-game subscription services and cloud gaming services.”
The regulator looked at the potential impact of the merger on competition between Microsoft, Sony and Nintendo in the console market. This highlighted the risks for Sony, especially Microsoft, that “have some of the world’s best-selling and most recognizable franchises, including Call of Duty,”. world of WarcraftAnd candy Crush,
But the CMA also noted that the gaming industry is in a “transitional phase” with the advent of cloud gaming and subscription services like Xbox Game Pass. This, it believes, provides a “window of opportunity for new entrants” that does not exist in the console space. It emphasizes the strengths of the “gaming ecosystem” Microsoft already has: consoles, a subscription service, a cloud gaming service, its own cloud platform (Azure) and a ubiquitous PC operating system (Windows), as well as 24 Game Development Studio.
CMA worries about how the popular game franchise’s massive Activision Blizzard catalog will benefit the future of the gaming landscape against this ecosystem, as opposed to what it might mean for Sony to be deprived of new Call of Duty games. could. Regarding Game Pass, it said, “As the multi-game subscription market is still in its infancy, the effect of the merger may be to shift or increase market concentration in Microsoft’s favor before future rivals have a chance to grow.” could be for.” For the long-term future of cloud gaming, the impact of the deal was potentially even greater, the CMA said. “CMA is concerned that, by leveraging ABK’s content and Microsoft’s broader ecosystem, Microsoft will have a unique advantage over existing and potential cloud gaming service providers.”
In calm and non-conflicting statements, Microsoft and Activision suggested that the CMA’s decision was expected, appropriate, and another step in a lengthy process. Activision CEO Bobby Kotick said, “As our industry continues to see many companies investing aggressively in gaming, including many of the world’s largest technology and media companies, government regulators can better manage our industry and the growing competition from around it.” taking appropriate and deliberate steps to understand the world.”
Microsoft gaming boss Phil Spencer argued that bringing games like Call of Duty, Overwatch and Diablo to Game Pass, and “opening up new distribution opportunities” […] Through the cloud to mobile “outside the mobile app store”, Microsoft was expanding the choice for both players and game developers. He also reiterated Microsoft’s “in-principle” commitment to having Call of Duty on PlayStation, noting that Microsoft supported multi-format publishing. minecraft After the acquisition of Mojang.
The interesting thing about CMA’s positioning is that it treats console, cloud, and subscription platforms quite differently. While Microsoft is quick to assure that it will not make Call of Duty console-exclusive for Xbox, it has made no such undertaking about allowing any of Activision Blizzard’s games on other subscription services. For the UK regulator at least, Game Pass exclusivity, and cloud exclusivity, are just as important, if not more. So Microsoft still has a case to answer.