The UK’s Competition and Markets Authority (CMA) said the Microsoft-Activision deal could hamper innovation in cloud gaming and raise prices. The 16-page report comes after the CMA said their investigative team conducted extensive research into Microsoft, Sony, Nintendo, and the games industry in general, along with email interviews with over 2,000 consumers.
The CMA recommended a few possible remedies to the problems they found in a separate report. Three involve divestiture, or the selling off of parts of the business. The CMA suggested Microsoft could sell the Call of Duty brand, Activision, or Blizzard, or barring those, the agency recommended the merger simply be blocked.
Chief among the concerns that led the CMA to these conclusions is the prospect of Microsoft limiting access to Call of Duty to the Xbox ecosystem. Microsoft has repeatedly said that it plans to provide “content parity” for the FPS franchise across all platforms, even the Nintendo Switch. The CMA noted that Nintendo consoles likely can’t run Call of Duty now and said there’s no evidence to suggest that will change anytime soon.
Their research also showed that a sizeable segment of consumers surveyed would leave PlayStation behind if Call of Duty became exclusive to Xbox, as they spend the majority of their time playing Call of Duty on PlayStation. The CMA didn’t disclose their sample demographics and data, so it’s unclear how representative of UK consumer behavior these findings are.
On the cloud front, where Microsoft has made no promises of parity or easy access, the CMA expressed concerns that adding Activision Blizzard’s portfolio to Xbox’s already sizeable cloud gaming library would hamper others seeking to enter the space. Their research showed that the key factor in starting a cloud gaming enterprise is having a large, desirable selection of games, which the CMA believes will be increasingly difficult for new entrants in the sector should the Microsoft-Activision deal go through.
The CMA will issue its full report on April 26, 2023. The European anti-competition agency is expected to issue its objections to the deal soon as well, and the U.S. Federal Trade Commission’s lawsuit against Microsoft, intended to block the deal, remains ongoing.
Written by Josh Broadwell on behalf of GLHF
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