Microsoft buy Activision Blizzard for $70B. Officially confirmed. Bobby Kotick leaving MS on 29th Dec.

"This Merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom. This Merger will be referred for an in-depth investigation unless the parties offer acceptable undertakings to address these competition concerns".

Summary:

- Markets where a substantial lessening of competition could happen are gaming consoles, multi-game subscription services and cloud gaming services.

- Microsoft has until September 8th to provide guarantees. If they can't this review goes to Phase 2.

- The console gaming market has strong network effects and that makes difficult to enter it. In the last 20 years only MS, Nintendo and Sony
have been significant suppliers of console gaming.

- The CMA believes the gaming industry is in a transitional phase due to the development of cloud gaming services and the emergence of multi-game subscription services.

- The CMA believes that the shift to cloud gaming services and multi-game subscription services is opening a window of opportunity for new entrants and these new entrants will need: 1) a strong gaming catalogue to attract users; 2) access to cloud infrastructure and an operating system (OS) license.

- Beyond gaming, Microsoft has other business areas that are relevant. 1) Azure and 2) Windows. Because of its popularity, game developers generally make games that are designed and optimised for Windows OS.

- The CMA gathered data and reviewed over one thousand internal documents from Microsoft and ABK to understand their businesses, their future strategies, and the gaming industry as a whole. The CMA also gathered evidence from other market participants, such as game developers and competitors across console, cloud, PC, and mobile gaming.

- In the time available, the CMA focused on: 1) if Microsoft could withhold or degrade ABK's content from other consoles or multi-game subscription services; 2) if Microsoft could leverage its broader ecosystem together with ABK's game catalogue to strengthen network effects, raise barriers to entry and ultimately foreclose rivals in cloud gaming services.

- The CMA is concerned that having full control over this powerful catalogue, especially in light of Microsoft's already strong position in gaming consoles, operating systems, and cloud infrastructure, could result in Microsoft harming consumers by impairing Sony's ability to compete as well as that of other existing rivals and potential new entrants.

- The evidence gathered points out to ABK's content, especially Call of Duty, as being important and capable of making a material difference to the success of rivals' gaming platforms. ABK invests significant time and capital in creating regular Call of Duty releases, which consistently rank as some of the most popular games. These titles require thousands of game developers and several years to complete, and there are very few other games of similar calibre or popularity.

- The CMA believes the Merger could allow Microsoft to make ABK content, including Call of Duty, exclusive to Xbox or Game Pass, or otherwise degrade its rivals' access to ABK content, such as by delaying releases or imposing licensing price increases.

- The CMA found that the potential strategic benefits to Microsoft of using ABK's content to foreclose rivals— such as expanding the Game Pass user base and strengthening network effects in its gaming ecosystem—could outweigh any immediate losses in terms of licensing revenues.

- The CMA notes that Microsoft has followed this approach in several past acquisitions of gaming studios, where it made future game releases from those studios exclusive in consoles to Xbox (such as the upcoming Starfield).

- The CMA believes that in the short- to medium-term, the main rival that could be affected by this conduct would be Sony. Evidence suggests that Microsoft and Sony compete closely with each other in terms of content, target audience, and console technology. Nintendo, on the other hand, competes less closely with either of Sony or Microsoft.

- The CMA considers that Call of Duty is sufficiently important that losing access to it (or losing access on competitive terms) could significantly impact Sony's revenues and user base. This impact is likely to be felt especially at the launch of the next generation of consoles, where gamers make fresh decisions about which console to buy. The CMA believes that the Merger could, therefore, significantly weaken Microsoft's closest rival, to the detriment of overall competition in console gaming.

- As the market for multi-game subscription gaming services grows, Microsoft could use its control over ABK content to foreclose rivals, including recent and future entrants into gaming as well as more established players such as Sony. Absent the Merger, ABK games would in principle be available to any multi-game subscription service.

- After the Merger, Microsoft would gain control of this important input and could use it to harm the competitiveness of its rivals. As the multi-game subscription market is still in its infancy, the effect of the Merger could be to tip or significantly increase concentration in the market in Microsoft's favour before future rivals have a chance to develop. The CMA therefore believes that the Merger gives rise to significant competition concerns in multi-game subscription services (including cloud gaming services, to the extent these are distributed through multi-game subscription services).

- Microsoft already has a combination of assets that is difficult for other cloud gaming service providers to match. By having a large and well-distributed cloud infrastructure, Microsoft will be able to host games on its servers on preferential terms and reach gamers throughout the world without having to pay a fee to third- party cloud platforms. By having Windows, the OS where the vast majority of PC games are played, Microsoft can stream games to Windows PCs without having to pay an expensive Windows licensing fee and may be able to design and test games made for Windows more effectively than rivals. And by having an existing console ecosystem, Microsoft has an existing user base of gamers to which it can promote its cloud gaming services, as well as a range of popular games that it can offer.

- The Merger would, therefore, bring together the company in a uniquely strong position to offer cloud gaming services with one of the industry's strongest gaming catalogues. The CMA is concerned that, by leveraging ABK's content and Microsoft's wider ecosystem, Microsoft will have an unparalleled advantage over current and potential cloud gaming service providers.

- The CMA therefore believes the Merger could substantially reduce competition in cloud gaming services.

twitter.com/xboxp3/status/1565314009133420544

jawa_ wrote:"We intend to publish our games everywhere on Game Pass!

Oh, and Call of Duty will be available on PlayStation."

“In January, we provided a signed agreement to Sony to guarantee Call of Duty on PlayStation, with feature and content parity, for at least several more years beyond the current Sony contract, an offer that goes well beyond typical gaming industry agreements,” says Microsoft Gaming CEO Phil Spencer in a statement to The Verge.

Saint of Killers wrote:MS should just throw Sony and the competition authorities a bone by confirming CoD will continue to release on PS this gen.

more heat than light wrote:

Saint of Killers wrote:MS should just throw Sony and the competition authorities a bone by confirming CoD will continue to release on PS this gen.

They have. Repeatedly.

more heat than light wrote:I mean, a lot of people (myself included) thought this would be the case with the Bethesda stuff too. Difference here is that they've been pretty open about continuing to release on PlayStation, at least for the next few years.