The United Kingdom is relaxing its objections to Microsoft takeover from Activision Blizzard. The Competition and Markets Authority (CMA) has amended its findings and determined that the merger would not lead to a significant reduction in competition in the console space. While the evidence remains the same, the watchdog now finds that Microsoft’s ownership of franchises like Call of Duty “would not materially affect” Sony’s ability to compete with PlayStation systems. Microsoft could “degrade” PlayStation’s appeal, according to the CMA, but Sony’s platform has a strong enough catalog to limit the damage.
The Authority also reconsidered its view that Microsoft could benefit from shutting down Call of Duty’s PlayStation audience. More recent Microsoft data suggests the company could incur substantial losses under “any plausible scenario” by making the games franchise Xbox-exclusive or offering exclusive benefits, according to the CMA. In other words, too few players would switch from PlayStation to Xbox for this strategy to work.
The CMA makes it clear that the updated results do not change its concerns about cloud gaming services. In February, the regulator said Microsoft accounts for up to 70% of the global cloud gaming market, and buying Activision Blizzard could hurt gamers who can’t afford an expensive console or PC.
We’ve asked Microsoft and Sony for comment. Activision Blizzard told Engadget in a statement that the CMA now has an “enhanced understanding” of the console market and that Microsoft has already implemented solutions for the remaining issues. Activision argues that Sony is only trying to “protect its dominance” by challenging the acquisition.
Sony has long opposed the deal, calling it a “threat to our industry” that could hurt the quality of Call of Duty on PlayStation. Microsoft made a number of concessions in hopes of landing the Activision Blizzard takeover, including 10-year cross-platform promises for Call of Duty as well as arrangements for bring games to rival cloud platforms.
The UK overseer’s change of heart does not overcome resistance to the merger in other countries. The United States Federal Trade Commission is still sue to block the unionand points out that Microsoft has made future titles like red fall Exclusive to Xbox on consoles despite assurances given to European Union officials. Objectors can also comment on the findings before the end of March. However, the new position further improves Microsoft’s chances of completing the acquisition – a major regulator just dropped its main point of contention.
Update 3/24 at 4:10 p.m. ET: Microsoft President Brad Smith said his company “appreciates” the CMA’s review and believes it “underscores a growing consensus” that the Activision Blizzard pact will create more competition.
