Microsoft-Activision deal faces more criticism as Sony calls CMA’s latest stance “unprecedented and irrational”.
UK Competition and Markets Authority (CMA) initially expressed concern regarding the proposed acquisition of Activision Blizzard by Microsoft, stated it could hurt competition and lead to higher prices and fewer options for gamers in the UK. The CMA later changed its mind, which was unexpected, and included new information that addressed some of its concerns with the deal. This change in stance has drawn criticism from Sony, which has accused the regulator of being “surprising, unprecedented, and irrational”. We will examine in details of this case and explore the different positions taken by both parties involved.
Sony questions CMA’s revised stance
In its response to the CMA’s revised appraisal, Sony has argued that the regulator’s new findings are based almost exclusively on a single economic model, which it claims is flawed. Specifically, the CMA’s new “lifetime value” model is said to show that Microsoft would suffer a significant financial loss if it kept Call of Duty exclusive to Xbox. Sony responded to this claim, the model’s data was flawed and that Microsoft would gain from players switching to Xbox in a way that was three times greater than the lifetime value of the average PlayStation user.
CMA’s new conclusion
The new CMA finding that no user with less than 10 hours of gameplay or $100 spent on Call of Duty would switch from PlayStation to Xbox has been denied by Sony. Furthermore, using Minecraft as an example of a game Microsoft kept cross-platform is ineffective because it is a single-release title that does not influence gameplay, engagement, or purchasing decisions to the same extent as Call of Duty.
Microsoft’s attempts to gain approval
Microsoft has made several deals to bring Call of Duty to third-party cloud gaming platforms in an effort to gain approval for the acquisition. Microsoft has also informed authorities that it is ready to offer full feature and content parity for a 10-year period on each new Call of Duty game released on PlayStation on the same day it becomes available on Xbox. Whether these steps will be enough to allay the CMA’s worries is still up in the air.
CMA’s final report ruling
Activision Blizzard deal final report from the CMA is due on April 26. Sony’s response has asked the CMA to revisit its evaluation of Microsoft’s incentives and partial foreclosure and make the necessary corrections for the mistakes found in its paper. According to Sony’s defense, the CMA’s decision to reverse course on the consoles’ harm theory is not supported by the addendum.
The proposed acquisition of Activision Blizzard by Microsoft has attracted significant attention and scrutiny from various parties, including Sony and the UK Competition and Markets Authority. Although some people were surprised by the CMA’s revised status, it is still unknown whether the final report ruling will support the current position or adopt a different approach. Sony and Microsoft will continue to compete in the gaming industry in the meantime, with Sony paying close attention to activities connected with a possible merger.
