REG - Competition and Mkts - CMA update: Microsoft/Activision

Activision BlizzardAnnouncement

24/03/2023 13:15

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RNS Number : 1882U  Competition and Markets Authority  24 March 2023

CMA narrows scope of concerns in Microsoft - Activision review

·    New evidence provisionally alleviates concerns in relation to supply
of gaming consoles in the UK

·    Previously stated provisional view that deal raises concerns in cloud
gaming unaffected

·    Investigation continues, with final report still due by 26 April 2023

The CMA has today issued updated provisional findings in its assessment of
Microsoft's proposed acquisition of Activision.

In February, the Competition and Markets Authority (CMA) published provisional
findings setting out that the deal raises competition concerns in relation to
both console gaming and cloud gaming services in the UK. The publication of
the provisional findings initiated a period of consultation in which the CMA
invited responses to those findings from interested parties and continued to
gather further information.

The CMA has received a significant amount of new evidence in response to its
original provisional findings. Having considered this new evidence carefully,
together with the wide range of information gathered before those provisional
findings were issued, the CMA inquiry group has updated its provisional
findings and reached the provisional conclusion that, overall, the transaction
will not result in a substantial lessening of competition in relation to
console gaming in the UK.

The most significant new evidence provided to the CMA relates to Microsoft's
financial incentives to make Activision's games, including Call of Duty (CoD),
exclusive to its own consoles. While the CMA's original analysis indicated
that this strategy would be profitable under most scenarios, new data (which
provides better insight into the actual purchasing behaviour of CoD gamers)
indicates that this strategy would be significantly loss-making under any
plausible scenario. On this basis, the updated analysis now shows that it
would not be commercially beneficial to Microsoft to make CoD exclusive to
Xbox following the deal, but that Microsoft will instead still have the
incentive to continue to make the game available on PlayStation.

The CMA's addendum to its provisional findings today relates only to
competition in the supply of consoles and not to competition in the supply of
cloud gaming services, where the CMA is continuing to carefully consider the
responses provided in relation to the original provisional findings. The CMA's
merger investigation continues, and it remains due to issue its final report
by 26 April 2023.

Martin Coleman, chair of the independent panel of experts conducting this
investigation, said:

"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.

"Having considered the additional evidence provided, we have now provisionally
concluded that the merger will not result in a substantial lessening of
competition in console gaming services because the cost to Microsoft of
withholding Call of Duty from PlayStation would outweigh any gains from taking
such action.

"Our provisional view that this deal raises concerns in the cloud gaming
market is not affected by today's announcement. Our investigation remains on
course for completion by the end of April."

For more information, visit the Microsoft / Activision case page
(https://www.gov.uk/cma-cases/microsoft-slash-activision-blizzard-merger-inquiry)
.

Notes to Editors:

1.   For media enquiries, contact the CMA press office on 020 3738 6460 or
press@cma.gov.uk (mailto:press@cma.gov.uk) .

2.   Microsoft is a global technology company offering a wide range of
products and services, with a global turnover of nearly £125 billion last
year. Since 2001, it has sold various generations of Xbox gaming consoles.
Gamers typically download digital copies of the games they want to play on
Xbox from Microsoft's Xbox Store. Microsoft also offers a multi-game
subscription service, Xbox Game Pass, where gamers pay a monthly fee to gain
access to a library of games.

3.   Activision Blizzard is a game developer and publisher with a global
turnover of £6.3 billion last year. It develops popular gaming content for
consoles, PC, and mobile, which includes titles such as Call of Duty, World of
Warcraft and Candy Crush.

 

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