Microsoft strikes back against Sony, UK Government

Microsoft responded to the UK’s Competition and Markets Authority and Sony after the former outlined concerns over the $100b acquisition deal.

The UK’s Competition and Markets Authority (CMA) has outlined concerns over the potential Microsoft and Activision Blizzard merger, a deal worth approximately $100b AUD. Microsoft responded to these concerns, stating that “Sony may not welcome increased competition.”

The CMA outlined several issues it has with the potential merger, including potential harm to PlayStation and other subscription offerings, as Microsoft could potentially keep Activision Blizzard games off those platforms. (Thanks, Games Industry.)

“The CMA is concerned that having full control over this powerful catalogue, especially in light of Microsoft’s already strong position in gaming consoles, operating systems, and cloud infrastructure, could result in Microsoft harming consumers by impairing Sony’s – Microsoft’s closest gaming rival – ability to compete as well as that of other existing rivals and potential new entrants who could otherwise bring healthy competition through innovative multi-game subscriptions and cloud gaming services,” the CMA stated.

Microsoft says Sony has "chosen to block Game
Pass from PlayStation" and that it has "elected to protect its revenues from sales of newly released games, rather than offer gamers the choice of accessing them via its subscription, PlayStation Plus." All a response to UK's CMA pic.twitter.com/ytOIhLRoIr

— Tom Warren (@tomwarren) October 12, 2022

The regulatory agency also pointed out that Activision Blizzard, or ABK, currently isn’t offering any of its games on other subscription services: “The CMA recognises that ABK’s newest games are not currently available on any subscription service on the day of release but considers that this may change as subscription services continue to grow. After the Merger, Microsoft would gain control of this important input and could use it to harm the competitiveness of its rivals.”

Microsoft responded to the concerns by stating that it doesn’t believe Call of Duty would have that large of an impact: “The suggestion that the incumbent market leader, with clear and enduring market power, could be foreclosed by the third largest provider as a result of losing access to one title is not credible.”

It went on to explain how the deal actually promotes choice, and take umbrage at the CMA: “Should any consumers decide to switch from a gaming platform that does not give them a choice as to how to pay for new games (PlayStation) to one that does (Xbox), then that is the sort of consumer switching behaviour that the CMA should consider welfare enhancing and indeed encourage. It is not something that the CMA should be trying to prevent.”

The CMA will post its initial finding in January, and a final opinion by March 1st. The deal has been approved already by Brazil and Saudi Arabia, following some heated exchanges via the Brazilian regulatory agency. Saudi Arabia approved the deal immediately, stating it had “no concerns.”

Written by Junior Miyai on behalf of GLHF.