The UK’s Competition and Markets Authority (CMA) today sided with Microsoft, over concerns the software giant could cut Call of Duty from other platforms such as PlayStation if the proposed Activision Blizzard deal is approved. The regulator still has concerns about the impact of the deal on the cloud gaming market and will complete its investigation by the end of April.
The text of the report was as follows:
“After considering the additional evidence presented, we have now tentatively concluded that a merger would not significantly reduce competition in console gaming services because the cost to Microsoft of blocking Call of Duty from PlayStation would outweigh any gains from taking such action.”
says Martin Coleman, chair of the independent panel of experts conducting the CMA investigation.
The CMA had originally tentatively concluded that Microsoft’s strategy to block Call of Duty from the PlayStation would be profitable. Microsoft was not happy with that conclusion and publicly criticized the authority’s accounts earlier this month, arguing that the CMA’s financial modeling was flawed.
CMA used a financial model that compares gains over five years to losses over one year only! Microsoft argued that the authority had “obvious errors” that ultimately skewed the results. The CMA has now updated its model and admits that Microsoft would indeed see a financial loss if it blocked Call of Duty from the most popular platform.
Microsoft says it welcomes the Capital Markets Authority’s decision to reform its financial model. Rima Alili, corporate vice president and deputy general counsel for Microsoft Corporation, said in a statement to Microsoft The Verge websiteWe appreciate the CMA’s careful and comprehensive assessment of the evidence and welcome its updated provisional results. “This deal will provide players with more choices in the way they play Call of Duty and their favorite games. We look forward to working with the Capital Markets Authority to resolve any further outstanding concerns.”
And now, after Microsoft is very close to completing its largest deal with Activision Blizzard, there are not many tricks left for Sony and Jim Ryan, after Sony lost a lot in trying to thwart that deal. We are not talking here about financial losses, but rather about losses in terms of relationships. Sony should expect different treatment from Microsoft and other major companies from now on.