The latest development in Microsoft’s long pursuit to formally acquire Activision Blizzard for US $69 billion is good news for Xbox. On 24 March 2023, the United Kingdom’s Competition and Markets Authority (CMA) came to the conclusion that the merger of the Xbox and Activision Blizzards brands would not create a scenario of unfair competition in the console gaming industry, which it had previously expressed grave concerns about.
The subject of the concern was one of Activision Blizzard’s biggest and most recognisable franchises, Call of Duty. Sony has been touting that Microsoft’s acquisition of the franchise would essentially create a situation where Microsoft would make future titles in the game exclusive to the Xbox ecosystem. The result of this, according to Sony, would be the PlayStation user base abandoning Sony’s console in order to play it on Xbox.
Sony’s representatives have even gone so far to say that Microsoft could purposely sabotage PlayStation versions of Call of Duty.
Microsoft has long been implementing measures to counteract these claims from Sony, suggesting that making the first-person shooter franchise an Xbox exclusive would not make sense for them financially. They’ve also provided safeguards that guarantee future Call of Duty would continue to come to PlayStation platforms, as well as Nintendo platforms, for at least 10 years. Microsoft has been emphasising the fact this agreement would persist through to the next generation of consoles, and would also give PlayStation sufficient time to develop its own exclusive Call of Duty competitor, if it so wished.
The CMA has now agreed, saying that the evidence suggests that Xbox’s acquisition would be ‘significantly loss-making under any plausible scenario’, as reported to VGC.
‘Having considered the additional evidence provided, we have now provisionally concluded that the merger will not result in a substantial lessening of competition in console gaming services because the cost to Microsoft of withholding Call of Duty from PlayStation would outweigh any gains from taking such action.’
While this does not mean that Microsoft’s Activision Blizzard acquisition has been approved by the CMA just yet, it does mean that it is more likely, as the regulator now has fewer concerns about the deal.
The CMA has stated that it still has concerns about the potential influence Xbox has in the cloud gaming market, though Microsoft has also been taking precautionary measures in this area, including a 10-year deal with cloud gaming company, Boosteroid.
The CMA is expected to reach its conclusion by 26 April 2023. The Microsoft and Activision Blizzard deal will still have additional hurdles with market regulators to jump through, however, including with the European Commission, which recently delayed its decision to 22 May 2023.