British regulator: Activision takeover by Microsoft could harm gamers
The Competition and Markets Authority, a British regulator, has published preliminary findings into Microsoft’s acquisition of Activision. The supervisor is critical. Bobby Kotick, the CEO of Activision, is not happy with the British conclusions.
The CMA says in preliminary conclusions that the acquisition desired by Microsoft could lead to higher prices, less choice or less innovation for British gamers. According to the regulator, the acquisition means that Microsoft will become even stronger in cloud gaming, harming competition in this growing sector. According to the CMA, this could harm British players if they cannot ‘afford expensive consoles’. The deal would also have a negative impact on players by damaging the ‘important rivalry between Xbox and PlayStation’.
These preliminary findings are the result of a wide-ranging investigation carried out by the CMA over the past five months to understand the implications of the acquisition for the market. Interviews were held with leaders from Microsoft and Activision, and three million internal documents from the two companies were analyzed. In addition, the regulator conducted an independent survey of UK gamers and gathered evidence from other console makers, publishers and cloud gaming companies.
The CMA specifically mentions Call of Duty and says that this game, among several other titles, plays an important role in the competition between consoles. “The evidence available to the CMA, including data on how Microsoft measures customer value in the normal course of business, currently indicates that Microsoft would find it commercially advantageous to make Activision’s games exclusive to its own consoles or available only on PlayStation consoles on worse terms. The CMA’s preliminary findings note that Microsoft has used this strategy of buying game studios and making their content exclusive to its platforms after several previous game studio acquisitions.”
The British regulator does not say anything about the fact that Microsoft has plans to bring Call of Duty to Nintendo consoles once the takeover is completed. There is also no mention of Microsoft’s previous confirmation that it has made an offer to Sony to make Call of Duty available for the PlayStation consoles for ten years. The titles would be released simultaneously on Xbox and PlayStation consoles. Keeping content exclusive is certainly not unusual in the console games market; competitors such as Sony and Nintendo also use this.
Bobby Kotick said in a interview with the American CNBC his bile about, among other things, this critical British attitude. He referred, among other things, to statements by British Prime Minister Rishi Sunak, according to whom the United Kingdom can become the ‘Silicon Valley of Europe’. Kotick warned that “if deals like this don’t go through, it won’t be Silicon Valley, it will be Death Valley.” He also talked about the likelihood of a recession for the UK after Brexit and that the country should embrace transactions such as the acquisition of Activision because it would provide opportunities and jobs. Speaking to the Financial Times, he criticized the British government again and also criticized the CMA. The regulator would not think independently and would be guided too much by the ideology of the FTC, the American counterpart of the CMA.
Microsoft wants to acquire the game publisher for $68.7 billion in what would be the largest acquisition in the gaming sector to date. The companies announced the deal last year. The American regulator FTC, among others, is critical because Microsoft would receive an unfair advantage and could limit competition in the market.