Microsoft has some choice words for the UK CMA in a new statement responding to their investigation of the Activision Blizzard deal.
Earlier this year, Microsoft revealed that they managed to broker a deal to acquire Activision Blizzard, a deal that affects multiple video game companies and their deals, as well as the industry as a whole. Of particular interest was Sony’s close relation with Activison’s Call of Duty franchise, receiving preferential treatment through the years in terms of being first to provide gamer access, open beta access, DLC, etc.
In this specific situation, the US Foreign Trade Commission (FTC), the UK Competition and Markets Authority (CMA), and the European Commission, have all launched antitrust investigations over the deal, seeking to answer the question of whether the deal breaks antitrust laws.
As we had previously reported, these regulatory bodies started with Phase 1 investigations. In this phase the regulators are simply attempting to determine if the said merger will harm the greater role of competition in the video game industry.
In the case of the UK’s CMA, they have already decided that there is a possibility that the deal will harm competition, so they have now moved into Phase 2, doing even more probing into the effect such a move will have on the industry with a clear determination if it will be harmful or not.
In a broad statement to the CMA, Microsoft argues, mainly, that Sony’s position as market leader makes the argument that they could be foreclosed as a result of losing access to one title to be implausible.
To bolster their case, Microsoft makes the case for Sony being the market leader, in terms of its 150 million install base, and their acquisition or financial interest in several large game studios like Bungie. It even cites Sony’s decision to increase the price of the PlayStation as an indication that they are unafraid of losing that position.
Subsequently, Microsoft makes curious arguments that their cloud gaming business, particularly Xbox Cloud Gaming, has not been that asuccessful for the company, and they do not have an undue influence on the industry on that end. Microsoft also characterizes itself as an advocate for the technology, that would prefer to encourage wider adoption.
Microsoft takes the time out to explain their position on Call of Duty in a full paragraph, which we will reproduce for you below.
“Microsoft has no intention to take Call of Duty away from gamers and, indeed, it has publicly committed not to do so. The value of Call of Duty depends on its community of gamers, the majority of whom are on PlayStation. Keeping Call of Duty on PlayStation is, therefore, a commercial imperative for the Xbox business and the economics of the Transaction. As such, Microsoft has offered Sony a contractual commitment to continue supplying it with Call of Duty, including new released with feature and content parity. The Referral Decision fails to explain why in the CMA’s view Microsoft would make such commitments publicly and privately, which are also reflected in its internal documents, if it had no intention of honouring them. Foreclosure strategies of the type outlined in the Referral Decision would alienate the Call of Duty gamer base and tarnish both the Call of Duty and Xbox brands, undermining the rationale for the Transaction. Microsoft would place at risk over USD [sic] in annual revenue from sales of Call of Duty on PlayStation, as well as substantial revenues from other Xbox games distributed via PlayStation. Microsoft has been clear that it is counting on revenues from the distribution of Activision Blizzard games on Sony PlayStation.”
To sum up, Xbox states that the CMA adopted Sony’s complaints in moving to Phase 2 without the appropriate level of critical review. They make the claim that their plans are to make Call of Duty availavble to more gamers in more ways than is currently possible, as Activision Blizzard have been doing as their own company.
Microsoft’s statements are an argument for the CMA to take back their decision to go onto Phase 2. It is possible that the governing body will continue with the investigation but eventually decide in Microsoft’s favor because of precisely these arguments. With the loyalty of Call of Duty players on PlayStation on the line, gamers and people in the game industry are definitely following each step of this acquisition closely.
Source: VideoGamesChronicle
