Microsoft’s Activision Blizzard acquisition edges closer as CMA states deal “will not result in a substantial lessening of competition”

The UK’s Competition and Markets Authority (CMA) has concluded that Microsoft would not have the incentive to keep Call of Duty off competing consoles such as PlayStation should the Activision Blizzard merger go through.

In an addendum released today, the CMA also provisionally concluded the acquisition of Activision Blizzard would not result in a substantial lessening of competition in the market.

According to the preliminary decision today, the CMA believes that the cost of Microsoft keeping Call of Duty off PlayStation would outweigh any gains from such action. Furthermore, should the company decide to make the franchise exclusive to its consoles, the strategy would only degrade PlayStation’s offering to “some extent.” It would, however, not materially affect the company’s ability to compete.

“Given the significant losses that this model suggests Microsoft would incur post-merger, under all plausible scenarios, we now place relatively more weight on this evidence when assessing it in the round, together with Microsoft’s behavior following previous acquisitions and its longer-term strategic objectives,” read the addendum.

“Our assessment also shows that Microsoft has acquired a range of gaming studios and, with very few exceptions, has redirected the efforts of those studios to produce exclusive Xbox games, and now consider that it is not sufficiently conclusive to suggest that Microsoft would have the incentive to foreclose PlayStation.”

The government body also concluded Microsoft would not have the incentive to partially foreclose on PlayStation by releasing an inferior product compared to Xbox or by raising the price of PlayStation versions, as Sony had previously suggested.

In short, the CMA concluded that the merger would not result in the lessening of competition in the UK market for the supply of console gaming services. It does, however, not represent a change in the CMA’s provisional findings related to cloud gaming services.

The CMA had previously carried out two separate quantitative analyses to assess whether the Activision Blizzard acquisition would result in the loss of competition in console gaming services in the UK, mainly due to Call of Duty.

In part of its bid to acquire Activision Blizzard, Microsoft made known multiple times it had no desire to split the Call of Duty community by pulling the game from PlayStation, as it recognized it would incur a potential financial loss.

It even went so far as to offer Sony a 10-year contract in good faith, but the deal was reportedly refused. Nintendo, however, did accept a 10-year deal to bring Call of Duty games to Switch, and Microsoft has offered to place its games, as well as titles acquired with the merger, on various cloud gaming platforms such as Nvidia’s GeForce Now.