Brazilian regulator clears proposed acquisition by Microsoft

Brazilian regulator clears Microsoft’s proposed acquisition of Activision Blizzard!

A clear announcement comes from Brazil about the takeover of Activision Blizzard by Microsoft: Approved! The planned takeover was approved by the Brazilian supervisory authority without any restrictions or further instances.

On Wednesday, the country’s Economic Defense Council (CADE) said it had approved the merger without restrictions.

“Given the popularity of Call of Duty, it’s reasonable to assume that if Activision Blizzard’s games were no longer available on Sony consoles, PlayStation users might choose to switch to Xbox or even PC to continue having access to the franchise’s games,” reads the CADE’s summary.

“On the other hand, it’s also fair to assume that if upcoming Call of Duty games become exclusive to the Microsoft ecosystem would be available.”

“Nevertheless, one cannot exclude that Microsoft considers an exclusivity strategy for Activision Blizzard games potentially profitable, even if a decision in this direction could result in the loss of a relevant part of sales, users and even popularity of Call of Duty .”

“Theoretically, such a strategy could help boost Xbox sales, expand the Game Pass subscriber base, and strengthen network effects in the Microsoft ecosystem to offset any short-term loss of revenue from game sales.”

The CADE ruling goes on to say that exclusive content is “very important” for competition in the console market and is one of the key factors behind PlayStation and Nintendo’s market leadership.

“Exclusive games are a benchmark for competition between Microsoft and SIE, although to date no company has developed or acquired an exclusive game that has decisively tilted the balance in favor of a console. That’s because proprietary exclusives are less popular and bring in less revenue than AAA third-party games that were available on Xbox and PlayStation by then.”

“As previously mentioned, Nintendo does not currently rely on Activision Blizzard content to compete in the market. Sony, in turn, has several attributes – strength of the world’s leading brand for more than 20 years, extensive experience in the industry, largest user base, largest number of installed consoles, robust catalog of exclusive games, multi-publisher partnerships, brand-loyal consumers, etc. – which contribute to this likely to maintain PlayStation’s competitiveness in a possible post-acquisition scenario, even if access to Activision Blizzard content is lost.”

“In addition, it is important to emphasize that the central objective of CADE’s activities is the protection of competition as a means of promoting the well-being of Brazilian consumers, and not the defense of the particular interests of certain competitors.”

“Finally, one must not lose sight of the fact that the owner of the legal interests protected by Law No. 12.529/2011 is the entity and not the competitor/economic operator as an individual entity.”

“In that sense, SG/Cade, while acknowledging that a portion of PlayStation console users (by Sony) may decide to switch to Xbox if Activision Blizzard’s games – and Call of Duty in particular – become exclusive to the Microsoft ecosystem, does not believe that such an opportunity in itself poses a threat to competition in the console market as a whole.”

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