The UK’s Competition and Markets Authority (CMA) released a number of responses to their investigation into the merger of Microsoft and Activision-Blizzard. One of these responses comes from Microsoft themselves, who accuse the CMA as making “fundamental and obvious error” in their calculations. Microsoft also calls out Sony, judging their opposition to be “a self-serving attempt to protect its dominant market position.”
If Microsoft’s criticisms are accurate, this would be a significant flaw in the CMA’s argument against the merger. Back in Phase 1 of the investigation, the CMA calculated the Life Time Value, or LTV, that would come from players moving to Xbox for their acquired Activision Blizzard titles. What Microsoft points out however is that these calculations use a profit figure from five years of LTV, and a losses figure from just one single year. Looking at profits for five years – without an equal amount of losses taken into consideration – would skew the data. We’re unable to validate this ourselves as the CMA withheld their calculations from the public.
This isn’t the only blow dealt today to the CMA’s protest of the merger. A number of responses from UK-based games companies were published by the CMA, with all six of them supporting the merger. A response from ‘market participant E‘, kept anonymous at their request, said the deal would “help to create a more level playing field between Xbox and PlayStation which, at this point in time, is sorely needed.” Meanwhile, market participant D is a AAA developer who sees no risks to the deal, whilst market participant F says “we honestly found the arguments against this acquisition to be slightly exaggerated and out of proportion.”
Things aren’t looking good at this point for CMA’s objections to the deal, which are being countered not only by Microsoft, but by the wider UK gaming industry as a whole. We can expect a final report from the CMA sometime in April, where the ultimate decision will be made.
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