The United Kingdom's Competition and Markets Authority states that half of the Activision Blizzard competitors it talked to were "concerned" regarding its acquisition by Microsoft. The CMA is reaching the end of its Phase 2 investigation into Microsoft's acquisition of Activision Blizzard and the situation isn't great for Xbox. While the public may not see Xbox ownership of Call of Duty to be particularly harmful, Activision Blizzard's competitors seem to disagree.
In September 2022, the CMA concluded its Phase 1 exploration of the Activision Blizzard acquisition by calling for an in-depth investigation due to its potential for lessening competition in the United Kingdom. That Phase 2 investigation recently reached a provisional conclusion, stating it found competition concerns. Before the CMA delivers its final conclusion, Microsoft will have an opportunity to respond and negotiate, which it will need to in order to shift the CMA away from blocking the acquisition.
As part of the materials the CMA has now shared publicly regarding its Phase 2 investigation into the Activision Blizzard acquisition, its shared a "Summary of third party calls" document. This document details conversations with six unnamed third parties, each described as similarly positioned competitors to Activision Blizzard. Of the six, three of these third parties alleged that Microsoft's acquisition of Activision Blizzard would have a negative impact on competition.
🎮Our in-depth investigation has provisionally found the @Microsoft and @Activision merger could reduce competition in #cloud and #console gaming markets, and harm UK gamers.https://t.co/t3apZu9PXd— Competition & Markets Authority (@CMAgovUK) February 8, 2023
A short thread on our findings ⬇️#Gaming #Xbox pic.twitter.com/2H1UhyNwL8
As for what "negative impact on competition means," a specific answer isn't available. A general description is written as "affording Microsoft the ability and incentive to foreclose potential and existing rivals in the console buy-to-play, console multi-game subscription, and cloud gaming spaces." In other words, there's a belief that Microsoft would use its control of Call of Duty and Activision Blizzard's other popular games to manipulate the console market, as well as stifle competition to the Xbox Game Pass subscription service and cloud gaming services.
While three third parties are said to believe the Activision Blizzard acquisition would have a negative impact on competition, two said they did not agree and had no concerns. The final third party said it was too early to determine what kind of impact the acquisition might have. Still, that half of the interviewed third parties voiced concerns is undeniably a red flag.
Unfortunately, the anonymity of the third parties does make this report difficult to fully evaluate. Other third-party publishers include Tencent, NetEase, Electronic Arts, Take-Two, Bandai Namco, Square Enix, Ubisoft, and Sega. Some of these third parties have close relationships with Sony. Some of them are significantly larger and more influential than others. There are undoubtedly politics at play. Microsoft has its work cut out for itself to make the acquisition go through, especially with Sony apparently no longer communicating with Xbox.
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