The mysterious Market Participant A, who responded to the UK CMA’s request from the public by supporting Microsoft’s acquisition of Activision Blizzard King, also had some strong words to the regulator.
Founded relatively recently in 2013, the Competition and Markets Authority (CMA) is a merger of two prior regulatory bodies in the UK, namely, the Office of Fair Trading, and the Competition Commission.
The CMA’s function is to regulate competition across all industries operating in the UK. Its investigation of the Microsoft purchase of Activision Blizzard King is only one of many inquiries the organization makes on behalf of the country.
While the CMA has many employees from the prior regulatory bodies, its relative newness as an organization does mean its scope and powers hasn’t really been tested to the degree that other regulators looking into the Activision purchase, such as the FTC and the European Commission, have been. That does also mean, in spite of the seeming rigor of the CMA’s investigation, they may be easier to sway than other regulators to agree to let the purchase push through.
In fact, the UK regulator seems to have taken more time to deliberate on this matter than their counterpart across the pond. We knew that they had started investigations alongside the FTC as early as October, but while the FTC has chosen to block the purchase after two months, the CMA is still collecting opinions from the public as they enter into Phase 2 investigations.
Market Participant A made some forceful arguments to convince the CMA that Microsoft’s acquisition will be good for competition. However, it was their assertion to the CMA itself that will catch anyone’s eye.
In their own words:
“While concerns have been raised by Sony in particular, ultimately the CMA’s priority is in protecting consumers and not to preserve the status quo of competitors. This industry is far from static and one that frequently has new entrants that have the ability to quickly capture market share, such as had happened with Fortnite. It is understandable that Sony is seeking to maintain its position, given it has invested a lot of capital, time and energy towards creating this. However, the landscape is
changing given the wide adoption of subscription-based services and cloud-based platforms in other industries. These have reduced the barriers to entry and such innovation has allowed consumers to have new methods to pay for content, along with having access to a wider range of content without sacrificing quality.”
Market Participant A’s argument to the CMA is that they should not accept Sony’s statements about competition wholesale. If we accept their argument on behalf of Microsoft, blocking this purchase would only place an unnecessary barrier to the rise of cloud gaming and subscription games as a business model. These new innovations to the industry do threaten to upend the way video games have been made until now, but their wider adoption would benefit gamers as a whole, as well as the wider industry.
I know not everyone would be willing to accept this argument for what it says. Maybe some gamers just like Sony more than Microsoft. Maybe others, rightfully, are wary of the trend of game companies continuing to merge into even bigger companies that then become too big to fail.
But we have seen through the pandemic that there is some merit to the idea that video game subscriptions are good for consumers, and that they could be good for the industry as a whole too. There’s no reason that PlayStation players would continue to buy PlayStation consoles and games, and not be able to also subscribe to Game Pass to play those games on their PC.
It may have been hard to see it in the past few weeks of Sony and Microsoft doing their public back and forth, but the rest of the industry has their own perspectives on this purchase, and what they see may not be what gamers have first in mind, or in the interests of the console companies either. For example, there could be other game studios eager to take Call of Duty‘s place on Sony consoles as that platform’s premier military multiplayer shooter. It does not have to be Battlefield, or Rainbow Six, or even Sony’s own SOCOM to take this opportunity if it ever comes up.
There are certainly different angles to this acquisition, and the CMA’s final decision does not necessarily mean either Sony or Microsoft gets everything they want. The CMA’s responsibility is in deciding what terms of the purchase will be to the public’s benefit, and how they can mold the other aspects of it to be made more beneficial to the public.
Source: CMA
