The merger of Activision Blizzard and Microsoft is one step closer to becoming effective.
The purchase of Activision Blizzard by Microsoft is an operation of such magnitude that the regulatory bodies of the market have been forced to study with a magnifying glass the possible case of endangering competition within the video game industry. Something that PlayStation is trying to demonstrate because Microsoft could soon withdraw Call of Duty from PlayStation. There is still a long way to go, but the body of Brazil has already communicated its approval to this operation
Let us remember that in Brazil, unlike in other territories, this matter has been in the public domain and fans have been able to access a lot of information about the case. Such as PlayStation’s refusal of this purchase due to its possible effect on the sale of consoles, being the only company surveyed in the sector to be against Microsoft’s purchase of Activision Blizzard.
Microsoft one step closer to acquiring Activision Blizzard
This same Wednesday, the Administrative Council for Economic Defense (CADE) of Brazil** approved the merger between Activision Blizzard and Microsoft without restrictions**. The organization does collect some concerns about Call of Duty and its possible exclusivity on Microsoft platforms and services, but does not consider this a determining factor in the industry since Sony and Nintendo are leaders in the console market based on their exclusives. The latter without even having a prominent impact of any Activision Blizzard license.
“The possibility cannot be ruled out that Microsoft may consider potentially profitable adopt a strategy of exclusivity in Activision Blizzard gameseven if a decision in this direction could result in the sacrifice of a relevant part of the sales, users and even the popularity of Call of Duty”, expresses the committee (via VGC).
“This is because, in theory, such a strategy could contribute to boost Xbox sales, expand Game Pass subscriber base and strengthen network effects in the Microsoft ecosystem, to offset any short-term revenue loss from game sales.”
Although it considers the segment of exclusive games to be “very important” within the sector, CADE considers that no exclusive games developed or acquired by the manufacturers have opted for the sale of consoles in a significant way in the past. “This is because proprietary exclusive games they are less popular and generate less revenue than third-party AAA games which, until then, are available on Xbox and PlayStation”, estimates the agency.
Position of PlayStation and Nintendo after the purchase of Activision Blizzard
The Brazilian organization does not consider that this purchase of Activision Blizzard by Microsoft will alter the future of the video game industry. “Nintendo is currently not dependent on any Activision Blizzard content to compete in the market. In turn, Sony has several predicates: strength of the world’s leading brand for more than 20 years, extensive experience in the sector, largest user base, largest installed base of consoles, solid catalog of exclusive games, alliances with multiple publishers, consumers brand loyalty, etc., which should contribute to keep PlayStation competitive in a possible post-Operation scenario, including in the face of possible loss of access to Activision Blizzard content.”
Regarding possible criticism by some of the aforementioned agents, the Brazilian organization recalls that “the central objective of CADE’s activities is the protection of competition as a means to promote the well-being of Brazilian consumers, and not the defense of the particular interests of specific competitors“.
“After all, one cannot lose sight of the fact that the owner of the legal assets protected by Law No. 12,529/2011 is the community, and not the competitor/economic agent as a single entity.
“In this sense, although it is recognized that part of the users of PlayStation consoles (from Sony) could decide to migrate to Xbox in the event that Activision Blizzard games – and especially Call of Duty – become exclusive to the ecosystem of Microsoft, SG/Cade does not believe that such a possibility represents, in itself, a risk to the competition in the console market as a whole”.
“Is this about competing? Well, let’s compete”
In this way, Brazil, together with the regulatory body of countries such as Saudi Arabia, is one of the first markets to give its approval to the acquisition of Activision Blizzard by Microsoft, pointing out that, despite the possible resulting changes in trend, the rest of the industry agents has position and means to deal with the consequences. In other words, it would not alter the limits of competition or pose any risk to consumers as a whole.
The reports of the US Federal Trade Commission (FTC) and the Competition and Markets Authority (CMA) of the United Kingdom, two of the main bodies that could complicate things for Microsoft. While the American commission would pronounce during the next month of November, the British authority announced a second in-depth study that has a deadline of next March.
Meanwhile, this week we learned that Jim Ryan, CEO of PlayStation, went to Brussels to expose the company’s position on this matter before the corresponding economic authorities of the European Union. Faced with Playstation’s exhaustive fight to block this operation, Microsoft CEO Satya Nadella was not only sure of the success of the operation, he was also defiant against the competition. “So… is this about having competition? Well, let’s have competition“.
Let us remember that in recent weeks some of the anti-competitive techniques used by PlayStation against Xbox due to its position in the market, such as the blocking of Xbox Game Pass releases of some games that will also be released on PlayStation. In the same way as in the trial of Apple against Epic Games for the Fortnite case, we learned that PlayStation charged a significant commission to developers who wanted to implement crossplay on their PlayStation consoles due to their dominant position in number of users compared to the competition.