The UK’s CMA Changes its Stance Regarding Microsoft’s Activision Blizzard Deal

The UK’s Competition and Markets Authority (CMA) has released today updated provisional findings regarding Microsoft’s proposed acquisition of Activision Blizzard, and its provisional conclusion should be seen as an encouraging sign for Microsoft: The CMA previously stated that the deal could harm competition in the console market, but after receiving “a significant amount of new evidence,” the UK regulator has now changed its stance.

“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,” said Martin Coleman, chair of the independent panel of experts conducting the investigation.

In recent months, Microsoft execs reiterated many times that it would make no financial sense to pull Call of Duty games from PlayStation consoles as Sony is the market leader by a pretty wide margin. Moreover, Microsoft offered Sony a 10-year deal to keep Call of Duty games on PlayStation, which Sony refused. Microsoft also signed a 10-year Call of Duty deal with Nintendo and various cloud gaming platforms including Nvidia’s GeForce Now, Boosteroid, and Ubitus.

Despite these recent developments, the UK’s CMA is continuing its investigation with a narrowed focus on cloud gaming services. 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,” Coleman said.

Overall, this is very good news for Microsoft as it’s quite unlikely that the CMA states that Microsoft’s position in the cloud gaming market is anti-competitive. Microsoft has signed licensing deals with some of the biggest (Nvidia) and smallest players, and Microsoft Vice President Brad Smith previously teased that more of these deals would come. Microsoft hasn’t signed a 10-year deal with Amazon Luna yet, but it looks like a very good candidate to dismiss the concerns of the CMAs and other regulators for good.