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UK Regulators: Microsoft's Activision Deal Could 'Harm UK Gamers', Suggests Removing Call of Duty

UK Regulators: Microsoft's Activision Deal Could 'Harm UK Gamers', Suggests Removing Call of Duty - News

by William D'Angelo , posted on 08 February 2023 / 2,966 Views

The UK's Competition and Market Authority (CMA) has released its provisional conclusion on Microsoft's Activision Blizzard acquisition. The CMA did an investigation over the last five months to understand the gaming market and the potential impact the deal could have on the industry.

The CMA concluded the deal could put Microsoft in an even stronger position in cloud gaming and could stifle competition in the growing market, which in turn could harm UK gamers who are unable to afford consoles. It could also weaken the rivalry between Xbox and PlayStation in the video game console market and the CMA says this could also harm UK gamers.

The deal if approved "could result in higher prices, fewer choices, or less innovation for UK gamers," according to the CMA.

UK Regulators: Microsoft's Activision Deal Could 'Harm UK Gamers' and Suggests Removing Call of Duty

The CMA has suggested that one possible solution is to require a "partial divestiture of Activision Blizzard." This might include the following:

  • Divestiture of the business associated with Call of Duty
  • Divestiture of the Activision segment of Activision Blizzard, Inc. (the Activision segment), which would include the business associated with Call of Duty
  • Divestiture of the Activision segment and the Blizzard segment (the Blizzard segment) of Activision Blizzard, Inc., which would include the business associated with Call of Duty and World of Warcraft, among other titles.

The CMA's other possible solution is the "prohibition of the merger."

The regulators in the report did mention that Microsoft told them of existing and potential contractual arrangements with other platforms such as Sony's PlayStation and Nintendo. The CMA will consider these as a possible remedy. However, it would prefer a structural remedy such as removing the Call of Duty IP or Activision altogether from the deal.

The CMA did state it "will consider any other practicable remedies" that Microsoft or other interested third-parties may propose.

The UK regulators are inviting responses from the interested parties to its list of proposed remedies by February 22 and responses to its provisional finding by March 1. The CMA will release its final report by April 26.

UK Regulators: Microsoft's Activision Deal Could 'Harm UK Gamers' and Suggests Removing Call of Duty

Microsoft corporate vice president and deputy general counsel Rima Alaily in a statement to VideoGamesChronicle stated, "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."

Alaily added, "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."

Activision Blizzard in its own statement said, "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."

UK Regulators: Microsoft's Activision Deal Could 'Harm UK Gamers' and Suggests Removing Call of Duty

Martin Coleman, the chair of the independent panel of experts conducting this Phase 2 investigation, said, "It’s been estimated that there are around 45 million gamers in the UK, and people in the UK spend more on gaming than any other form of entertainment including music, movies, TV, and books.

"Strong competition between Xbox and PlayStation has defined the console gaming market over the last 20 years. Exciting new developments in cloud gaming are giving gamers even more choice.

"Our job is to make sure that UK gamers are not caught in the crossfire of global deals that, over time, could damage competition and result in higher prices, fewer choices, or less innovation. We have provisionally found that this may be the case here.

"We have also today sent the companies an explanation of how our concerns might be resolved, inviting their views and any alternative proposals they wish to submit."

UK Regulators: Microsoft's Activision Deal Could 'Harm UK Gamers' and Suggests Removing Call of Duty

The Microsoft acquisition of Activision Blizzard has also faced scrutiny by the  Federal Trade Commission (FTC) in the US and European Union regulators. 

The FTC in December announced it was looking to sue to block Microsoft's acquisition of Activision Blizzard as it would give Microsoft the ability to suppress its competitors in gaming. The FTC pointed to Microsoft's record of acquiring and using gaming content to suppress content from rival consoles, including its acquisition of the parent company of Bethesda Softworks, ZeniMax Media.

European Union regulators in a recent report issued a formal antitrust warning to Microsoft over its Activision Blizzard acquisition.

A Microsoft spokesperson in a response to the formal antitrust warning said it is committed to "finding a path forward" and is "confident" it will be address the concerns from the European Union regulators.

This formal antitrust warning was expected and Microsoft was already reportedly looking to offer remedies to concerns by the European Union regulators.

The deal has been approved in BrazilChileSaudi Arabia, and Serbia.

A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can contact the author on Twitter @TrunksWD.

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method114 (on 08 February 2023)

Doesn't seem MS is understanding the message. They keep trying to push this 10 years commitment thing and think that the FTC,CMA , EU will let it fly. They are literally talking about splitting up the companies and MS's response is "We will give them 10 year commitments." MS is essentially saying "You have nothing to worry about for 10 years and we are committed to signing a contract for that. After those 10 years though we get to do what we want". The FTC is not playing around anymore they are going after google as well.

  • +5
shikamaru317 method114 (on 08 February 2023)

Xbox knows that the FTC argument has no legal merit and will lose in court, most analysts and 3rd party lawyers I have seen agree the FTC has no case and will lose. The CMA taking issue with the acquisition and requesting an ABK breakup is a far bigger issue, as the CMA has actual power unlike the FTC which is greatly handicapped. If they can't get the CMA to accept behavioral remedies such as extending the CoD deal longer than 10 years, then their only other recourse would be to cave to what the CMA wants, and selloff CoD, a franchise so big it is worth at least 1/3rd of the value of entire ABK acquisition, which would be difficult for Microsoft to get $20b or more selling just CoD by itself during any sales negotiations because everyone would know their back is against the wall since they are required to sell it within a certain timeframe by the CMA.

CMA could kill the acquisition entirely here as it would be better for Microsoft to back out and take the $2b penalty for backing out of the acquisition, than it would be to be required to sell CoD for much less than it is worth just to get the rest of ABK.

Hopefully CMA will accept behavioral remedies, which they say they are open to, such as extending the CoD deal past 10 years to 15 or 20 years, or offering similar 10 year deals on other ABK franchises such as Overwatch, Diablo, Crash, Spyro, Tony Hawk, etc. If CMA decides against accepting behavioral remedies later on, this deal is up shit creek without a paddle most likely, as I can't see Xbox being willing to selloff CoD for much less than it is worth just to get the rest of ABK.

  • +11
Bandorr (on 08 February 2023)

My general understanding from the beginning was this was about King and mobile. If you don't care about COD then drop the 10 year stuff. That just seems weird.

  • 0
gtotheunit91 Bandorr (on 08 February 2023)

How can they? COD is all regulators have cared and asked questions about lol. They sent freaking surveys about how MS owning COD would affect console of choice!

  • +2
Zkuq gtotheunit91 (on 08 February 2023)

That also seems like the only troublesome part here to me.

  • +1
LurkerJ (on 08 February 2023)

Whatever. FTC, CMA and the EU are wasting taxpayers money, managed and operated by PS fanboys; thankful for my tinfoil hat that protected my brain and allowed me to be an independent thinker.

  • -2
TheLegendaryBigBoss LurkerJ (on 08 February 2023)

I doubt the FTC, CMA or the EU members even play games, so it's unlikely they're PS fanboys.

  • 0
zero129 (on 08 February 2023)

Like i said before and i will say it again. I honestly dont believe any real Sony fan see this as a problem or think even if Ms did make CoD exclusive it would hurt the PS brand much. The ones who are concerned about this deal are ones who just dont want to see Ms buying them. But would be happy if it was Sony or Tencent who own much bigger market share then Ms.

  • -5
method114 zero129 (on 08 February 2023)

You're wrong I'm concerned and while I am a Sony fan and I do think this will hurt Sony in some way if COD goes exclusive that's not what I'm concerned about. I don't like the consolidation of the industry and I don't want to see it happening anymore.

Whether this deal happens or not doesn't affect me and never will. I have plenty of money for gaming and to buy whatever console I want. I have a deck, PC, Ps5 and my wife has a switch which is basically mine cause she never uses it.

I care about this industry and consolidating into the hands of a few companies is not going to benefit us. People are very short sighted. I've seen what these companies will do whenever they get into a position of power and I don't want any of them getting any bigger then they already are.

On top of that I'm getting very concerned with GP and what it's going to do with the quality of games if it becomes standard. So far I haven't seen MS release anything on par with what Sony is putting out and now they've just announced that they are basically abandoning Halo infinite. If this is the level of effort MS is going to put into games just because they are on GP and some consider them free then I want nothing to do with it. Star Citizen is basically my last hope for GP. If this game turns out to be garbage with horrible quality then I think GP has some real problems it needs to fix.

  • +2
pitzy272 method114 (on 08 February 2023)

I agree with most of what you said, esp your GP concerns. We still don’t know the true viability of that model for games. If gaming was forced to go in that direction, there is a possibility that it could change things dramatically, esp in regard to single player AAA games.

The only reason MSFT has made GP work up to now is bc they’ve been loss leading since GP started. Billions of dollars to MSFT is nothing, but it’s far different for Sony, who’s around 1/20th the size of MSFT.

  • +3
Machiavellian method114 (on 09 February 2023)

So you are concerned about GP but you are not concerned about PS+. Just think about that for a second because the only difference between the 2 service is that one release their first party games day one while the other does not. Your concern about quality is not realistic because quality is exactly what GP must maintain or guess what, subs would disappear. Why would anyone sub to a service that deliver sub par games or content. MS is never going to be the only game distribution in town as we have plenty of services out their and if their quality went down, they they would lose subs which is also not a smart tactic.

On another note, when Sony decides to purchase Sega, Square or Konami you name it, I would love to see all this concern about them cornering the market and how it hurts the Xbox eco system because I am sure there will be a lot of people changing their tune real quick.

  • +2
method114 Machiavellian (on 09 February 2023)

The fact that PS+ doesn't release games day 1 is a big difference. I'm not sure why you are acting like it isn't. My concern isn't completed unrealistic it's a question people have been asking for a long time. Do you think MS would be the first company to offer a sub par service and end up losing their business because of it? What your basically saying is that no company in the world would ever offer a sub par service because then they lose customers. Except we have plenty of examples of this exact scenario happening.

I'll be one of the first to complain about it like I've said several times already. All this consolidation needs to stop.

  • +1
pitzy272 zero129 (on 08 February 2023)

What? If CoD was made exclusive to Xbox, it would 100% cause harm to Sony. That is factual. The only thing debatable is how much it would harm them. It would literally remove profit from Sony, and since we’re talking about CoD, it would be a lot of profit, and every year. Then, there would be millions of people, esp casuals, who wouldn’t even bother to buy Sony’s platform, bc most of what they play is CoD.

You’re wrong on your other theory as well; if I was forced to choose between MSFT or Tencent, I would choose MSFT. The CCP and the tendrils it has in companies like Tencent is ultimately more concerning.

  • +1
dane007 (on 08 February 2023)

So cma is okay with Sony doing that for third party games that never come to their competitors and forces people to buy their console?. Hypocrite much

  • -5
TheLegendaryBigBoss dane007 (on 08 February 2023)

They are probably okay with it because that isn't regulated, only mergers & acquisitions are (which have far more consequences), although I might be wrong.

  • +2
The Fury TheLegendaryBigBoss (on 08 February 2023)

One is just a business deal between 2 businesses, that is agreed and no doubt contracts are signed between both. That isn't exactly something the CMA has control over or really would ever care about.

This is a $70billion buy out.

  • +1
Machiavellian The Fury (on 09 February 2023)

Doesn't really matter if the end result does the same thing. So if Sony is allowed to use their market dominance to stifle competition and they are ok with it, the results is the same as what they are claiming against MS.

  • +2
pitzy272 Machiavellian (on 09 February 2023)

There is absolutely a price tag that MSFT could have paid to make Final Fantasy 16 and Remake exclusive to Xbox. And you know what? They could have afforded that price tag 1,000 times over with all the money they have. But they didn’t do it. Also though, Final Fantasy has a far stronger association and audience with Sony than Xbox; Xbox has a near-negligible presence in Japan where FF is very popular; and Sony has a strong relationship with Square Enix for many years, partially due to them both being Japanese companies. Also, you’re acting as though MSFT hasn’t done deals like this as well. Tomb Raider, Sunset Overdrive, etc. The difference is that they just seemed to change strategy to outright buying a massive number of studios, rather than individual games. And they’re the only ones who can afford to do this, bc they’re the second largest company in the world with nearly unrivaled cash piles.

People talk about Sony’s dominance almost as tho MSFT is some victim. The only reason PlayStation has their current dominance is bc MSFT has squandered over a decade of opportunity to become more competitive. Sony and Nintendo have bought studios, but they have then fostered their studios over many, many years, and that’s why their studios are currently of such high quality. Should Sony and Nintendo be looked down on for managing their studios and games better?

Even after buying more studios probably than Sony and Nintendo combined and over a much shorter time period, MSFT is still floundering when it comes to games. If MSFT is already struggling to manage their current studios and games, how the hell are they gonna be able to manage another, what, 2,000 employees?

  • +2
tslog (on 08 February 2023)

These liars didn’t even bother explaining how this deal would elevate Microsoft to roughly equal with Sony and Nintendo in the most important parts of the market….. buy still want so lie, by saying only in the most vague terms, that this deal would be ‘unfair’.

Who is running this corrupt incompetent clown show.

Rest of the world sees no problem, the 2 most corrupt countries have the biggest problem. That is all you need to know.

  • -6
ClassicGamingWizzz (on 08 February 2023)

They keep talking about ten years this , ten years deal, sony this sony that. Governments dont care, they are concerned about microsoft buying their. Way into a Monopoly and all the bad stuff that will hapen if the deal goes on. Them firing 10k people and still trying to get another 10 k people alone should be enough reason.

  • -7
gtotheunit91 ClassicGamingWizzz (on 08 February 2023)

Monopoly. You keep using that word. I do not think it means what you think it means.

-Inigo Montoya

  • +6
ClassicGamingWizzz gtotheunit91 (on 08 February 2023)

We had five big multiplatform publishers, microsoft bought one and is on their way to buy the biggest of them all , and lets not talk about the small studios they bought. Now pick every game that was suposed to be multiplatform this gen and give me how many are they. This is not trying to compete with others or buying stuff to have the best possible profit,its buying their way into leaders by hurting competition.

They said multiple times they will not stop at activision.

  • -5
Spade ClassicGamingWizzz (on 08 February 2023)

I'm hoping for your sake, they don't stop at Activision. Your meltdowns are pretty funny. Hope they get some Japanese devs soon.

  • +2
ClassicGamingWizzz Spade (on 08 February 2023)

Now i am curious about these meltdowns i have 🤭

  • -5
Libara ClassicGamingWizzz (on 08 February 2023)

You clearly have no idea what the definition of a monopoly is. Google will help you there.

  • +5
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