Microsoft asserts that Call of Duty’s retention on PlayStation is a commercial imperative for Xbox

Microsoft has published a statement in response to remarks made by the UK’s Competition and Markets Authority regulator about the acquisition of Activision Blizzard.

The inquiry against Microsoft’s proposed acquisition of Activision Blizzard has officially been pushed into a second phase by UK’s CMA. The regulator is worried that the Xbox Activision Transaction may “significantly weaken” the position of PlayStation. Meanwhile, it appears that Microsoft is not pleased with the prior statement that the UK’s CMA regulator made over the Xbox’s purchase of Activision Blizzard.

Microsoft claims that Sony has acquired a number of game studios since the announcement of the Transaction, including Bungie, the developer of the popular online game Destiny 2, Haven Studios, Lasengle, and Savage Games, as well as a minority stake in FromSoftware, the developer of the anticipated most successful game of 2022, Elden Ring.

During this time, the issue has been raised more publicly owing to the exclusive availability of Call of Duty on PlayStation. Microsoft has announced that it has no intention of removing Call of Duty from PlayStation’s catalog, given the overwhelming majority of Call of Duty players are on Sony’s platform. In addition, keeping Call of Duty’s presence on PlayStation is claimed to be a business need for Xbox’s operations. Microsoft also asserts that Sony PlayStation has twice as many players than Xbox, and that even if Call of Duty were removed off PlayStation, Sony would still have the largest player population among platforms. As a consequence, Microsoft has offered Sony a contractual promise to continue producing Call of Duty, including future versions with feature and content parity with their predecessors.

Meanwhile, the Referral Decision does not explain why, in the judgment of the CMA, Microsoft would offer such public and private promises, which are also reflected in Microsoft’s internal documents, if it had no intention of preserving them at the time they were made. Methods of foreclosure as described in the Referral Decision would alienate the Call of Duty user base and ruin the Call of Duty and Xbox brands, undermining the rationale for the Transaction. Microsoft would risk annual gains from sales of Call of Duty on PlayStation, in addition to substantial money from sales of other Xbox games on PlayStation. Microsoft has made it quite clear that it expects Activision Blizzard products released on Sony PlayStation to generate revenue.

The planned acquisition is presently being reviewed by authorities throughout the world. In phase two of its examination, the CMA has appointed an independent panel to examine the transaction in further detail and determine if it is likely to substantially reduce competition. In any case, the CMA has the right to prevent the completion of mergers and acquisitions if it finds that necessary action has not been taken to remedy a reduction in competition.

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