UK Regulator: Microsoft-Activision Deal Probably Won’t Harm Console Market

Microsoft has notched a new win in its ongoing bid to buy Activision Blizzard. A UK regulator says the deal won’t undermine competition in the video game market, at least for consoles. 

On Friday, the UK’s Competition and Markets Authority (CMA) announced(Opens in a new window) a provisional conclusion that finds “overall, the transaction will not result in a substantial lessening of competition in relation to console gaming in the UK.” 

The regulator came to the conclusion because it received new information on the financial aspects on the proposed acquisition; specifically, Microsoft’s financials around possibly making Activision’s Call of Duty franchise exclusive to the Xbox. 

The CMA originally argued Microsoft had ample motivation to take the Call of Duty franchise and other Activision Blizzard games off Sony’s PlayStation. Namely, it would help Microsoft bring more consumers to the Xbox.

But on Friday, the UK regulator said: “While the CMA’s original analysis indicated that this strategy would be profitable under most scenarios, new data (which provides better insight into the actual purchasing behaviour of CoD gamers) indicates that this strategy would be significantly loss-making under any plausible scenario.

“On this basis, the updated analysis now shows that it would not be commercially beneficial to Microsoft to make CoD exclusive to Xbox following the deal, but that Microsoft will instead still have the incentive to continue to make the game available on PlayStation,” the CMA added. 

Despite this provisional conclusion, Microsoft isn’t out of the woods. While the UK regulator is dropping its investigation into the acquisition disrupting the console market, the CMA still plans on examining the deal’s impact on cloud gaming. In addition to traditional console sales, Microsoft also operates Xbox Game Pass, which can let you play Xbox games online. The UK regulator plans on completing its investigation by the end of next month. 

Outside the UK, Microsoft also has to contend with regulators in the European Union and the US stymying the deal. However, Reuters reports(Opens in a new window) the EU is expected to clear the acquisition due to Microsoft offering licensing deals to keep Activision games on other platforms.

Meanwhile, in the US, the Federal Trade Commission has sued to stop the merger over concerns Microsoft would “deny or degrade” Activision Blizzard games from appearing on rival platforms. But in response, Redmond says it’s already committed to making Call of Duty games available on Nintendo‘s consoles and Nvidia’s cloud-focused GeForce Now for a 10-year period should the acquisition go through.