Microsoft speaks out after UK regulators push Activision Blizzard deal to second approval phase

Since its initiation of the deal, Microsoft’s purchase of Activision Blizzard has been under heavy scrutiny from many regulatory bodies, and the U.K. is already pushing the deal to a second phase of approval due to concerns that it might negatively affect its competitors.

Now, Microsoft is speaking out to give more insight into its argument. In a statement to GamesIndustry.biz, Microsoft said “the suggestion that the incumbent market leader, with clear and enduring market power, could be foreclosed by the third largest provider as a result of losing access to one title is not credible.”

The Competition and Markets Authority pushed the approval to a second phase in early September, and a similar move has been made in the American regulatory process as well, but the company still expects the deal to go through by the end of its fiscal year.

In its argument, Microsoft said that it doesn’t make sense to deny the acquisition when PlayStation is far and away the market leader. The company said that there were over 280 first and third-party exclusive titles released on the PlayStation in 2021, an amount that is almost five times what Xbox put out that same year.

In its statement, Microsoft says that the U.K. regulators are incorrectly relying on “self-serving statements by Sony which significantly exaggerate the importance of Call of Duty to it and neglect to account for Sony’s clear ability to competitively respond.”

Xbox vs. PlayStation: Will market competition suffer?

While it is true that Sony could be underplaying its ability to compete with Xbox fairly if Call of Duty were to be removed from the platform, Microsoft said it doesn’t plan to remove the game from the PlayStation platform. But without any kind of legally binding document, the company could clearly do whatever it wants after the deal is put through, including taking Call of Duty off of the PlayStation platform, promises be damned.

Another point of contention that U.K. regulators are looking at is the concern of game streaming. Microsoft and Activision Blizzard have worked together to become dominant in that area using Microsoft-owned Azure, which is a cloud service provider.

Cloud streaming for gaming is pretty new, and Microsoft’s argument relies heavily on that fact. Microsoft says that it faces “a number of disadvantages” in the cloud streaming competition, but the CMA is worried that Microsoft will corner the market in it if it is able to adapt first.

The CMA is continuing its detailed look into whether the acquisition will hinder competition in an unfair way, and its findings from phase two of the approval process will become available in January 2023. The final report from the regulatory body is expected to come by March 1.

In the U.S., the Federal Trade Commission is still looking at the deal as well and is in a similar phase in its research as the CMA. Some reports suggest that the deal could be ruled upon as early as November in the U.S.