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Microsoft's Activision Blizzard takeover "will not result in a substantial lessening of competition", says provisional CMA findings

UPDATE: "Pendulum swings back in favour of deal completing", says analyst.

Call of Duty Modern Warfare 2
Image credit: Activision

UPDATE 2: The CMA's provisional conclusion "swings the pendulum back in favour of the deal completing", a leading game industry analyst has told Eurogamer.

"My long-term view of this deal has always been that it would complete but with further concessions from Microsoft to smooth the process," Ampere Analysis' Piers Harding-Rolls said.

"However, the provisional Phase 2 findings of the CMA did give me pause for thought considering the structural remedies proposed. Today's updated findings swings the pendulum back in favour of the deal completing.

"Importantly, the change in stance on lessening of competition in the UK console market means that the requirement for structural remedies are substantially less relevant in my view. It now just remains to be seen how Microsoft and the CMA deal with the concern around cloud gaming services.

"The recent deals that Microsoft has signed are partially relevant, but I don't think these completely satisfy concerns around the inherent advantages that Microsoft holds when it comes to its cloud infrastructure. Overall though, this is clearly positive news for Microsoft and Activision Blizzard."

UPDATE 1: Microsoft has issued a statement in response to the CMA's provisional conclusion.

"We appreciate the CMA's rigorous and thorough evaluation of the evidence and welcome its updated provisional findings," a Microsoft spokesperson told Eurogamer. "This deal will provide more players with more choice in how they play Call of Duty and their favourite games. We look forward to working with the CMA to resolve any outstanding concerns."

Activision Blizzard has also issued a statement, obviously in support of the CMA's decision:

"The CMA's updated provisional findings show an improved understanding of the console gaming market and demonstrate a commitment to supporting players and competition," an Activision Blizzard spokesperson told Eurogamer.

"Sony's campaign to protect its dominance by blocking our merger can't overcome the facts, and Microsoft has already presented effective and enforceable remedies to address each of the CMA's remaining concerns. We know this deal will benefit competition, innovation, and consumers in the UK."

ORIGINAL STORY: The UK's Competition & Markets Authority has reached a provisional conclusion that Microsoft's bid to takeover Activision Blizzard "will not result in a substantial lessening of competition in relation to console gaming in the UK".

The CMA has today updated its provisional findings on the basis of new evidence in response to those findings, the most significant of which relates to Microsoft's financial incentives to make Activision's games (including Call of Duty) exclusive.

"While the CMA's original analysis indicated that this strategy would be profitable under most scenarios, new data (which provides better insight into the actual purchasing behaviour of CoD gamers) indicates that this strategy would be significantly loss-making under any plausible scenario," reads a new statement from the CMA.

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"On this basis, the updated analysis now shows that it would not be commercially beneficial to Microsoft to make CoD exclusive to Xbox following the deal, but that Microsoft will instead still have the incentive to continue to make the game available on PlayStation."

The CMA's addendum to its provisional findings relates only to console competition and not cloud gaming services, while it continues to "carefully consider the responses provided".

"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 this investigation.

The CMA is set to announce its final decision on the takeover on 26th April.

However, this advancement is a major step forward in the investigation and a positive conclusion for Microsoft.

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