Modern Warfare 2
Microsoft has hit another bump in the road on the way to its $69 billion acquisition of Activision-Blizzard. This time, as predicted, UK regulator, the Competition and Markets Authority (CMA) has come out with a finding that they believe the acquisition would “harm UK gamers.” Microsoft, of course, disagrees.
The finding is under a thousand wordsand focuses on the idea that a “small number of key games” are what drive competition between consoles. Naturally, this includes Call of Duty, one of the biggest franchises in the industry, which has long been the centerpiece of this debate. The CMA believes wielding the power of this singular franchise would tempt Microsoft into doing potentially anti-competitive things, including making Call of Duty exclusive to the Xbox ecosystem:
“The evidence available to the CMA, including data on how Microsoft measures the value of customers in the ordinary course of business, currently indicates that Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own consoles (or only available on PlayStation under materially worse conditions). The CMA’s provisional findings note that this strategy, of buying gaming studios and making their content exclusive to Microsoft’s platforms, has been used by Microsoft following several previous acquisitions of games studios.”
An exasperated Microsoft, which has explained dozens and dozens of times that they believe it would be financially better to continue to sell Call of Duty on PlayStation, issued their own statement reiterating that point, and their decade-long promise of total parity between systems:
“We are committed to offering effective and easily enforceable solutions that address the CMA’s concerns. Our commitment to grant long term 100% equal access to Call of Duty to Sony, Nintendo, Steam and others preserves the deal’s benefits to gamers and developers and increases competition in the market. 75% of respondents to the CMA‘s public consultation agree that this deal is good for competition in UK gaming. – Rima Alaily, Microsoft Corporate Vice President and Deputy General Counsel
What does 100% mean? – When we say equal, we mean equal. 10 years of parity. On content. On pricing. On features. On quality. On playability.”
The other main issue raised is that the CMA believes that this will serve to increase Microsoft’s advantages in the growing cloud gaming space, and buying one of the world’s biggest publishers would help boost their supposed 60-70% market share there. Microsoft has previously responded by saying that cloud gaming is still nascent and tiny, and a long way off from replacing traditional console or PC play. The “solution” proposed by the CMA is that they’d be okay with the deal if ABK divested Call of Duty, Activision, or Activision Blizzard. That seems…unlikely.
What this comes down to is the fact that the CMA simply does not believe what Microsoft is telling them. Microsoft is screaming until they’re blue in the face that they do not want to take Call of Duty off PlayStation and will not do that, even offering contracts to ensure that, but the CMA is just saying, “but you will though.” Sony, meanwhile, will continue to reject any deal offered to them as they attempt to sink the deal, as the worst case scenario for them is that the deal does go through and Microsoft ends up giving them COD anyway.
I do imagine this is getting pretty frustrating on Microsoft’s end, but if this becomes the consistent position of all regulators in major regions, I do wonder about the ultimate fate of this deal. But they will keep fighting, and as ever, this seems far from over.
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