The UK regulator The Competitions and Markets Authority (CMA) has handed down a provisional report on Microsoft’s pending acquisition of Activision Blizzard, stating that they would suggest “structural remedies” that would see Microsoft branching off some part of Activision, Blizzard or its key franchises like Call of Duty.
However, before it gives a final report in April, it would also consider “behavioural remedies”, such as Microsoft’s proposed licensing agreement to ensure that Call of Duty would remain on PlayStation consoles, and would also come to Nintendo Switch for the first time.
The CMA is of the opinion that the acquisition would reduce competition in console gaming, but just as importantly, in the growing arena of cloud gaming, where Microsoft is seen to have a lead. They also state that Microsoft would find it advantageous to make COD exclusive or enhanced for Xbox, and this would result in “higher prices, reduced range, lower quality, worse service and/or reduced innovation.” There’s also more than just COD, with Blizzard’s World of Warcraft highlighted as something that could be vital to the growth of Xbox Game Pass and cloud gaming.
“Given we have provisionally found that Microsoft already has a strong position in this market through its ownership of Xbox, a global cloud computing service, and the leading PC operating system (OS),” the CMA writes. “We are concerned that even a moderate increment to its strength may be expected to substantially reduce competition in this developing market to the detriment of current and future cloud gaming users.”
The CMA’s opinion came in part from polling the public, with around 2,000 respondents, 24% of which said they would think about switching from PlayStation to Xbox if COD was made exclusive.
Their proposed solution to this would be to break up Activision Blizzard in the process. Microsoft could sell off the part of the business that deals with Call of Duty (so basically all of Activision except for the rest of their IP), sell off Activision as a whole, or sell off both Activision and Blizzard. Or they could just block the whole acquisition.
Microsoft, Activision Blizzard and other parties have until 1st March to respond, but has already made its case clear, making an offer to Sony of a long term parity deal, signing an agreement to bring Call of Duty to Nintendo platforms, and pledging to keep COD on steam. With such a focus on Call of Duty, though, other parts of the company are seemingly being overlooked in this case in the US and EU.
In a suitably sassy statement on the matter, Activision Blizzard said “We hope between now and April we will be able to help the CMA better understand our industry to ensure they can achieve their stated mandate to promote an environment where people can be confident they are getting great choices and fair deals, where competitive, fair-dealing business can innovate and thrive, and where the whole UK economy can grow productively and sustainably.”
Source: CMA via GamesIndustry.biz, VGC
