UK Regulator Has Change Of Heart On Microsoft-Activision Deal, 'Call Of Duty' Key To New Assessment

The U.K.'s Competition and Markets Authority (CMA) has provided an update on its ongoing assessment of Microsoft Corp's MSFT proposed $68.7 billion acquisition of Activision Blizzard ATVI. While the update is provisional, the CMA has indicated that it does not anticipate any significant anticompetitive effects resulting from the deal.

In a press release published Friday, the authority stated that "the CMA inquiry group has updated its provisional findings and reached the provisional conclusion that, overall, the transaction will not result in a substantial lessening of competition in relation to console gaming in the UK."

See also: Microsoft Says 10 Years 'Sufficient' For Sony To Develop Alternatives To 'Call Of Duty'

Although the CMA's final report won't be ready until April 26, this news could be seen as a significant milestone in the acquisition process.

Earlier this month, the non-ministerial government department came under fire from Microsoft for what the tech giant said was flawed financial modeling related to its planned acquisition of Activision Blizzard. The CMA had initially concluded that a strategy by Microsoft to withhold the popular "Call of Duty" game from Sony's SONY PlayStation console would be profitable.

However, the CMA has since updated its financial model and revised its previous conclusion. It now acknowledges that if Microsoft were to withhold "Call of Duty" from PlayStation, it would actually result in financial losses for the company.

"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 wrote.

However, the U.K. regulator still has reservations concerning the deal's effect on the cloud gaming market. Martin Coleman is chair of an independent panel of experts conducting an investigation into the matter. "Our provisional view that this deal raises concerns in the cloud gaming market is not affected by today’s announcement. Our investigation remains on course for completion by the end of April," he said.

Rima Alaily, corporate vice president and deputy general counsel for Microsoft, told The Verge, "We appreciate the CMA’s rigorous and thorough evaluation of the evidence and welcome its updated provisional findings."

"This deal will provide more players with more choice in how they play Call of Duty and their favorite games. We look forward to working with the CMA to resolve any outstanding concerns," Alaily added.

Meanwhile, Lulu Cheng Meservey, Activision Blizzard's CCO, took to Twitter to make some remarks on the announcement. "The CMA’s updated provisional findings show an improved understanding of the console gaming market and demonstrate a commitment to supporting players and competition," she said.

See also: Microsoft Strikes Another 10-Year Deal To Expand Activision Games Availability

“Sony’s campaign to protect its dominance by blocking our merger can’t overcome the facts, and Microsoft has already presented effective and enforceable remedies to address each of the CMA’s remaining concerns. We know this deal will benefit competition, innovation, and consumers in the UK,” Meservey noted.

The CMA’s updated provisional findings show an improved understanding of the console gaming market and demonstrate a commitment to supporting players and competition.

Sony’s campaign to protect its dominance by blocking our merger can’t overcome the facts… https://t.co/NWejUKylol

— Lulu Cheng Meservey (@lulumeservey) March 24, 2023

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