The Competition and Markets Authority have announced today that it no longer believes there is a risk of a “substantial lessening of competition” should Microsoft take ownership of the Call of Duty franchise.
It had received a “significant amount of new evidence in response to its original provisional findings” and now claim that making Call of Duty and Xbox exclusive would be “significantly lossmaking under any plausible scenario”.
The new decision - a reversal on their previous provisional findings - would appear to represent the removal of huge obstacle to Microsoft's acquisition of Activision Blizzard taking place, but the deal isn’t out of the woods yet. The CMA are still investigating the possible impact that the deal could have on competition in the cloud gaming space - concerns shared by the ongoing EU investigation. And the biggest potential block on the deal remains in place with the US Federal Trade Commission investigation still ongoing.
Nonetheless the CMA’s new move today marks a reversal of attitude from last month when they decided that Microsoft WOULD be motivated to at least limit the availability of Call of Duty on PlayStation and that the only solution to this scenario would be if Microsoft were to sell off Call of Duty - something the software giant subsequently dismissed out of hand.
Yeah but, no but…
The crux of today’s change of heart would appear to be the result of Microsoft’s counter claims against the authority regarding inaccuracies in the financial modeling previously used with Microsoft stating that there were “clear errors in the figures being used to value the small number of Sony customers who might move to Xbox in the absence of Call of Duty”.
While Martin Coleman, chair of the independent panel conducting the CMA’s investigation, made light of the switcharound: “Provisional findings are a key aspect of the merger process and are explicitly designed to give the businesses involved, and any interested third parties, the chance to respond with new evidence before we make a final decision,” The Financial Times reported an ex-CMA lawyer as stating “This is extremely unusual. Restating your provisional findings is something you would rather die than do.”
Rather than gloat too much Microsoft remain courteous in reply stating today that: “We appreciate the CMA’s rigorous and thorough evaluation of the evidence and welcome its updated provisional findings.” And that “We look forward to working with the CMA to resolve any outstanding concerns.” Meanwhile Activision Blizzard chimed in “The CMA’s updated provisional findings show an improved understanding of the console gaming market and demonstrate a commitment to supporting players and competition. Microsoft has already presented effective and enforceable remedies to address each of the CMA’s remaining concerns.”
The cloud: The final battleground
Despite its findings regarding consoles, the CMA is still unconvinced about how this deal could affect competitors in the cloud streaming market, and still believes that while Microsoft is likely to stick to its word regarding sales, may have the motivation to make Activision Blizzard titles exclusive to its own subscription services, Game Pass.
While Xbox has struck numerous deals with the likes of Nvidia and Ubitus to bring these games to their services, Microsoft may therefore decide to withhold Activision Blizzard games from Sony’s PlayStation Plus service.
As to what happens next we'll have to wait until the new deadline for a descision.