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UK regulators say Xbox’s purchase of Call of Duty is not likely to damage console market

Microsoft would lose money if it took games away from PS5, regulators say

Andrew Griffin
Friday 24 March 2023 12:38 GMT
Related: Microsoft’s $69B Activision Blizzard deal will reportedly clear EU hurdle

Microsoft’s controversial purchase of Call of Duty developers Activision would probably not damage the console market, regulators have said in a major announcement in their ongoing investigation.

The deal would be one of the biggest in history, and see games like Call of Duty fall under the umbrella of Xbox. But it has proven controversial, with critics including PlayStation arguing that it would undermine the market for games consoles.

Initially, the UK’s Competition and Markets Authority had said that the deal raised concerns about both console gaming and cloud gaming in the UK. Its first report had suggested that it might require the deal to be changed if it was to go ahead.

Now the CMA says it has seen more information on the deal, and that it no longer believes there to be a concern about console gaming. It means that one of the major objections to the deal has been cleared, and the purchase looks less likely to be opposed or changed.

The CMA came to the decision after receiving data that suggested that it would not be profitable for Microsoft to make Call of Duty exclusively available on its Xbox consoles. It said that it had received new data that showed it would be “significantly loss-making” to do so.

The deal’s effect on the gaming market is perhaps the most significant objection raised by PlayStation. It has said that it will be difficult or impossible for its consoles to compete if the Xbox was the only way to play the game, which is among the most popular in the world.

In an attempt to deal with those objections, Microsoft has made a range of commitments including signing agreements with platforms such as Nintendo to commit to making the game available for at least 10 years. It has offered to do the same with PlayStation, but Sony has argued that such a deal would be too difficult to enforce.

The CMA said that its new analysis showed however 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”.

Regulators are only changing their view on the effect of the acquisition on console gaming. In the initial report, the CMA also raised concerns about what it could do to cloud gaming – and those concerns are unchanged, it said.

The final report in the investigation is due to be issued by 26 April. Other regulators – including those in the US and Europe – are also investigating the deal, and need to approve it before it will go ahead.

“Provisional findings are a key aspect of the merger process and are explicitly designed to give the businesses involved, and any interested third parties, the chance to respond with new evidence before we make a final decision,” said Martin Coleman, chair of the independent panel of experts conducting the investigation.

“Having considered the additional evidence provided, we have now provisionally concluded that the merger will not result in a substantial lessening of competition in console gaming services because the cost to Microsoft of withholding Call of Duty from PlayStation would outweigh any gains from taking such action.

“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.”

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