On the basis of new evidence submitted by the concerned parties since February, the UK Competition and Markets Authority (CMA) has revised its provisional findings, concluding for now that the Microsoft–Activision deal is unlikely to result in a significant lessening of competition (SLC) in the console gaming services market in the UK. The potential cloud gaming SLC previously outlined by the CMA remains under review.
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Today, the CMA published an addendum to its provisional findings from February, stating that its console gaming SLC concerns have been adequately addressed through incorporating new evidence submitted by Microsoft and third parties. Notably, the regulator has found that while the acquisition is greatly dissimilar to any past Microsoft acquisition, the lifetime value (LTV) model it has used to analyze the benefits and losses from the acquisition for each party suggest that Microsoft has no incentive to engage in a total foreclosure strategy with Call of Duty against PlayStation, and cannot use partial foreclosure strategies for this reason either as they would not “materially affect PlayStation’s ability to compete.”
While the arguments of Microsoft’s competitors in the console gaming market claimed that the Redmond company does have an incentive to engage in foreclosure strategies with Call of Duty, the CMA believes – after revising its predictive model based on input from all concerned parties – would lead to a net loss for all these parties in every scenario the regulator “found plausible.” Further, while the CMA recognizes that console manufacturers “place significant value in having exclusive content” and that Microsoft did make ZeniMax Media’s future releases Xbox-exclusive, it holds that this was an “acquisition of talent,” performed specifically for ZeniMax’s studios to create Xbox-exclusive content in the future as opposed to forcibly migrating multi-platform titles’ customer bases to Xbox.
While this does halfway clear the way for the acquisition, the CMA has explicitly stated that its cloud gaming SLC concern is still being reviewed in light of the responses submitted by all concerned parties. It is pertinent to mention that Microsoft’s new access agreements were not a factor in the revision of the CMA’s provisional findings. The deadline for the final report remains April 26, 2023.
Source: CMA