08 February 2023 , 14:52
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After a five-month investigation, the UK’s Competition and Markets Authority (CMA) has published their provisional conclusion that Microsoft's proposed Activision acquisition could “harm UK gamers”.
Call of Duty is at the centre of the CMA’s concerns, with the UK regulator offering up three proposals that could help the Microsoft buyout go through. These include divesting “the business associated with Call of Duty”, or suggesting Activision or Blizzard be removed from the deal and retain the rights to publish Call of Duty as a third-party title. Either way, it doesn’t look like they want Call of Duty as an Xbox exclusive.
UPDATED 17.44pm GMT, Wednesday, February 8, 2023: An Activision Blizzard spokesperson told Mirror Gaming: “These are provisional findings, which means the CMA sets forth its concerns in writing, and both parties have a chance to respond.
"We hope between now and April we will be able to help the CMA better understand our industry to ensure they can achieve their stated mandate to promote an environment where people can be confident they are getting great choices and fair deals, where competitive, fair-dealing business can innovate and thrive, and where the whole UK economy can grow productively and sustainably”.
In a press release posted on the UK government website, the CMA stated that the deal could result in “higher prices, fewer choices, or less innovation”. However, as the judgement is still provisional, Microsoft and Activision Blizzard still have the option to address the CMA’s concerns, with a deadline set for February 22. It looks like Microsoft is fully intending to fight it. In a statement given to Eurogamer, Rima Alaily, Microsoft's corporate vice president and deputy general counsel, said: “We are committed to offering effective and easily enforceable solutions that address the CMA's concerns".
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Later in that same statement, Rima Alaily doubled down on this, stating: “Our commitment to grant long-term 100 per cent 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”. She later clarified: “When we say equal, we mean equal. 10 years of parity. On content. On pricing. On features. On quality. On playability”.
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This isn’t the first time concerns over Call of Duty being an exclusive on a single platform have been raised. Last December, Microsoft president Brad Smith published an op-ed in the Wall Street Journal (via The Verge) which stated it had offered Sony a “ten-year contract” to see each Call of Duty release on PlayStation on the same day as on Xbox. It has offered the same deal elsewhere, which could see Call of Duty coming to Nintendo consoles, should the merger close. Elsewhere, Valve founder Gabe Newell said in a statement to Kotaku that Microsoft's ten-year deal to keep Call of Duty on Steam was ‘unnecessary’ and that he ‘trusts their intentions’.
One aspect which the CMA is concerned about, and one that isn’t really mentioned as much, is the impact the deal could have on cloud gaming. The CMA argues that because “Microsoft already accounts for an estimated 60-70% of global cloud gaming services”, it then buying one of the “most important game publishers” would “substantially reduce the competition that Microsoft would otherwise face in the cloud gaming market in the UK”.
Another one of the CMA’s main points is that making Activision games exclusive on a single platform could “substantially reduce the competition between Xbox and PlayStation in the UK”. However, it is worth noting that the likely reason for this acquisition in the first place is due to how much Sony exclusives have outperformed Xbox exclusives since the launch of the Xbox One and PS4 both critically and commercially.
The CMA will issue its final report on April 26, 2023.