Microsoft’s planned purchase of ActivisionBlizzard was disputed, according to Sony Interactive Entertainment (EIS), which expressed its belief that the UK Competition and Markets Authority (CMA) would pursue this. Sony expressed confidence that the regulator would decide the merger is likely to significantly lessen competition and should therefore be banned in a recently published reaction to the CMA’s statement.
The platform owner says in a 22-page response that indie developers would all suffer if Microsoft acquired sole custody of Activision’s content and that Microsoft could raise prices for games, hardware and subscriptions.
SIE is confident that the CMA’s Phase 2 investigation will confirm that the transaction is likely to materially lessen competition and should be prohibited
Microsoft would control irreplaceable content that drives user engagement. After the transaction, Microsoft would control Activision’s content that [redacted] times more user engagement on PlayStation than all of SIE’s top-performing first-party titles combined.
Sony maintains that after the transaction, “Microsoft would have the power and incentive to exclude or prevent rivals, including PlayStation and PlayStation Plus, from providing access to Call of Duty.” Microsoft recently claimed that it offered Sony a deal that would keep the Call of Duty series on PlayStation for a decade.
Sony claims that during its first investigation, the CMA obtained information showing that 30–40% of all console gaming minutes in the UK are spent playing Activision and Microsoft titles. Sony argues that customers, rivals and independent developers would all suffer if Microsoft acquired sole control of Activision’s hardware.
In the medium term, a significant number of PlayStation users would likely switch to Xbox and/or Game Pass
Faced with weaker competition, Microsoft would be able to: increase the prices of consoles and games for Xbox users (including those who switched from PlayStation); increase the price of Game Pass; and reduce innovation and quality.
Microsoft’s lockdown strategy would lock many consumers into Xbox, including existing Xbox users who play Call of Duty and those switching from PlayStation to play Call of Duty. These locked-in users would become less likely to change in response to any pro-competitive action by SIE.
This would effectively prevent SIE from competing for the business of a large portion of console gamers, thereby reducing its incentives to invest.
Sony Claims Activision Merger With Intent To Turn ‘PlayStation Into Nintendo’
Sony specifically mentions Microsoft’s remarks that other platforms, like nintendo switch, thrived without Call of Duty in part of his statement. Sony claims that this accusation “ignore the facts” in his last reply. Nintendo’s approach, according to SIE, differs from those of PlayStation and Xbox since it is not dependent on 18+ shooter brands, which, if the Activision deal is approved by international authorities, Microsoft would effectively own exclusively.
In this regard, he asserts that Microsoft “real goal“Partnering with Activision Blizzard is making PlayStation similar to Nintendo in that it doesn’t compete in that market.
Microsoft says Nintendo’s differentiated model demonstrates that PlayStation doesn’t need Call of Duty to compete effectively. But this reveals Microsoft’s true strategy. Microsoft wants PlayStation to become like Nintendo so that it’s a less close and less effective competitor to Xbox.
Ignoring these facts, Microsoft argues that Nintendo succeeded without access to Call of Duty. This misses the point. The decision identifies a wide range of evidence showing that Nintendo offers a differentiated experience to Xbox and PlayStation as it focuses on family games that are very different from PEGI 18 FPS games like Call of Duty.
Regulators in Saudi Arabia and Brazil cleared the Activision transaction, but the UK Competition and Markets Authority extended its investigation into a second phase. Before making a final decision, he now asks the public to express their opinion on the purchase.
The expected merger deal between Activision and Microsoft has hit several hurdles following criticism from various IT juggernauts and analysts. It will be interesting to see how Microsoft handles this.