Brazilian regulatory body accepts the proposed Activision Blizzard acquisition by Microsoft

On Wednesday, Brazil’s CADE approved the acquisition without conditions.

 

One of the first regulatory bodies to consent to Microsoft’s proposed acquisition of Activision Blizzard is Brazil.

 

The merger had received unrestricted approval, according to the Administrative Council for Economic Defense (CADE) of the nation on Wednesday.

 

In part of CADE’s summary, it is stated that “Given the enormous popularity of Call of Duty, it is reasonable to infer that PlayStation users could decide to migrate to Xbox, or even a PC, to continue having access to franchise games if Activision Blizzard games were no longer available on Sony consoles.”

 

“On the other hand, it’s also reasonable to assume that if upcoming Call of Duty games became exclusive to the Microsoft ecosystem, players loyal to the PlayStation brand could simply abandon the series, migrating their demand to other games available on their favourite console.”

 

Despite this, it cannot be completely ruled out that Microsoft may decide it would be financially advantageous to embrace an exclusive approach for Activision Blizzard titles, even though doing so may mean giving up a sizable portion of revenue, users, and even Call of Duty popularity.

 

This is due to the fact that, in principle, a strategy like this might help increase Xbox sales, grow the Game Pass subscriber base, and strengthen the network effects on the Microsoft ecosystem, helping to make up for any short-term revenue loss from the sale of games.

 

According to the CADE decision, exclusive content has been “extremely significant” for the competition in the console market and is one of the primary reasons for PlayStation and Nintendo’s leadership positions in the market.

 

Although no business has yet created or acquired an exclusive game that has significantly swung the scales in favour of a platform, exclusive titles are a yardstick of competitiveness between Microsoft and SIE. This is due to the fact that proprietary exclusive games are less well-liked and generate lower money than third-party AAA titles, which are already accessible on Xbox and PlayStation.

 

As was already evident, Nintendo does not currently rely on any Activision Blizzard content in order to compete in the market.

 

Sony, meanwhile, has a number of advantages that should help it maintain PlayStation’s competitiveness in a potential post-Operation scenario, even in the face of a potential loss of access to Activision Blizzard. These advantages include the strength of the world’s leading brand for more than 20 years, extensive experience in the industry, the largest user base, the largest installed base of consoles, a robust catalogue of exclusive games, partnerships with multiple publishers, brand loyal customers, etc.

 

“Additionally, it’s crucial to emphasise that the main goal of CADE’s actions is the protection of competition as a method of enhancing the welfare of Brazilian consumers, not the defence of the unique interests of certain competitors.

 

“After all, it is important to remember that the collective, not the competitor or economic agent as an individual entity, is the owner of the legal assets protected by Law No. 12,529/2011.

 

In this regard, despite the fact that it is acknowledged that some PlayStation console users (from Sony) may choose to switch to Xbox in the event that Activision Blizzard games, particularly Call of Duty, become exclusive to the Microsoft ecosystem, SG/Cade does not believe that such a possibility poses a risk to competition in the console market as a whole.

 

One of the first regulatory bodies to publicly disclose its correspondence over the merger included previously unreleased Q&A responses from firms like Sony, Ubisoft, Amazon, and Google.

 

The decision is in accordance with the General Authority for Competition of Saudi Arabia, which stated in August that it had “no objection” to the proposed acquisition of the games business.

 

Regulators from around the world are currently reviewing the proposed $68.7 billion acquisition because of antitrust concerns at a time when the gambling sector is consolidating more and more.

 

The US Federal Trade Commission (FTC) could reportedly make a decision on Microsoft’s proposed acquisition of Activision Blizzard by late November, according to a report released on Wednesday.

 

The UK’s competition watchdog revealed on Tuesday that it has given itself until March 1, 2023 to publish the results of its investigation into the merger.

 

Notably, given that Microsoft would acquire control of the Call of Duty franchise through the purchase, the Competition and Markets Authority (CMA) is concerned about the effect the deal may have on PlayStation’s capacity to compete.

 

Last Friday, Microsoft formally submitted its argument to the European Commission in support of its proposed acquisition of Activision Blizzard.

 

The merger must either be approved by the European competition authority by November 8 or it will enter a second, more thorough inquiry phase, as the CMA recently did.