UK regulator says Microsoft would lose “substantial” money by making Call of Duty Xbox exclusive
Despite its recent decision to block Microsoft’s Activision deal, the UK’s Competition and Markets Authority pushed back against concerns from Sony that Microsoft would make Call of Duty Xbox exclusive if the buyout were to go through.
Last week, the UK regulator moved to formally prevent Microsoft’s acquisition of Activision Blizzard from going through, citing anti-competition concerns, particularly in the Cloud gaming space. The 400-page report has now been thoroughly combed over and as such, new details continue to surface almost a week after its publication.
As spotted by IGN (opens in new tab), the CMA ultimately concluded that concerns by Sony that Microsoft would make Call of Duty exclusive to Xbox platforms were unfounded on the grounds that Microsoft would lose “substantial” money by doing so, adding, “it would not be financially profitable for [Microsoft] to engage in a total foreclosure strategy.”
To make this statement, the CMA used what it called the “critical diversion ratio,” that is, the rate at which Call of Duty players on PlayStation would have to switch to Xbox – as well as how much those converted players would have to spend – to make the deal profitable for Microsoft. Regulators also considered factors including the potential hit to Microsoft’s reputation if it were to renege on commitments to keep Call of Duty multiplatform. All things considered, it estimated that Microsoft would end up with a net loss if it took Call of Duty from PlayStation and other platforms.
While this specific part of the report would seem to appease concerns that Microsoft’s Activision buyout would be anti-competitive, ultimately the agency blocked the transaction from going forward, pending a likely appeal from Microsoft.
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