While Microsoft’s acquisition of Activision-Blizzard has already been approved in Brazil, the same cannot be said for the UK. Just last week, the UK’s Competition and Markets Authority (CMA) said a second phase of the investigation needed to be carried out due to monopoly concerns – something Microsoft vehemently denies.
It appears that the full response (about four pages long) from Microsoft has now gone online! While we got snippets of the answer last week, now you can read the whole thing from start to finish! Read the whole thing in the gallery below, and we’ve included some important bits in the text version as well.
These unsubstantiated damage theories are insufficient to justify a reference to Phase 2. Microsoft
is confident that, after an in-depth review, the CMA will conclude that there is no prospect
that the Transaction will result in a material lessening of competition in any established market
A higher stage 2 “balance of probabilities” threshold.
The CMA’s concerns are misplaced for the following reasons:
- Sony PlayStation has been the largest console platform for more than 20 years, with an installed base of more than 150 million consoles, which is larger than Nintendo and more than double that of Xbox.
- Today, Sony is engaging in behavior that reflects its market power in console gaming, including raising the prices of its consoles without fear of losing market share.
- The suggestion that a market leader with clear and sustained market power could be eliminated by the third largest provider as a result of losing access to a single title is not credible. There are over 4,000 games available on PlayStation alone.
- The evidence shows that the number of PlayStation Monthly Active Users (“MAU”) playing Call of Duty is not significant enough. Even without all these players (a highly unlikely outcome of a hypothetical foreclosure strategy), PlayStation’s player base would remain significantly larger than Xbox’s today.
- Since the deal was announced, Sony has acquired several game studios – including Bungie, developer of the popular online game Destiny 2, Haven Studios, Lasengle and Savage Games – and a minority interest in From Software, developer of 2022’s biggest game, Elden Ring (among other hit games). This complements Sony’s existing minority stake in Epic Games, publisher of Fortnite, a strong catalog of first-party games and an extensive portfolio of exclusive deals with third-party publishers. In 2021, there were more than 280 exclusive first- and third-party titles on PlayStation, almost five times more than on Xbox.
Microsoft seems to be hoping that the second phase can be avoided, although it looks like it will happen. It’s been one roller coaster ride and all because of one franchise! Although it could be argued that it is the most important franchise in all of gaming (in terms of revenue and such).
Stay tuned for this ever-unfolding drama that seems far from over.
thank you Tom Warren!
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