UDATE: Microsoft has responded to the CMA’s provisional findings report, stating that they ‘welcome’ the Authority’s decision to fix their financial model and appreciate the findings on their latest provisional report. Per The Verge:
Today in an announcement the Competition and Markets Authority of the UK released an update to their provisional findings report that was critical of the ABK and Microsoft merger proposal.
In the original report the CMA argued that the console market could be foreclosed by Microsoft with restrictive exclusivity practices around ABK’s biggest game applications in the call of duty market.
By making COD exclusive they argued Microsoft would suffer a short-term loss for bigger profits which would in the long run harm UK consumers, however this is no longer a concern given the extra information provided to the CMA which has led them to review their initial reporting methodology and come to a different outcome.
We also assessed whether Microsoft would have the ability and incentive to foreclose PlayStation through partial foreclosure strategies. We found that any such strategies would represent a deterioration of the equivalent of % of PlayStation’s game range, with the remaining % largely unaffected. That quality deterioration would likely represent only a fraction of the value that PlayStation gamers derive from CoD. As such, we provisionally consider that Microsoft would have no ability to foreclose PlayStation through partial foreclosure strategies (or, if the partial foreclosure strategies approximate a total foreclosure strategy, no incentive to do so).CMA
This comes a few weeks after Microsoft’s submissions to the CMA to correct some mathematical understandings on how the games market has historically operated itself. They also heard arguments from 6 developers/publishers who were supportive of the deal but wished for their submissions to remain anonymous.
This is a big shift in the regulatory process and comes a couple of weeks after the EU signaled they were not focused on the console market for SLC market concerns and were instead shifting to cloud gaming concerns where Microsoft could become the dominant player in an industry that is yet to fully mature.
The CMA have seemingly come to the same conclusion and will now narrow the scope of their remaining investigation to the cloud gaming market as well, where Microsoft has decided to strengthen access to smaller players by bolstering cloud gaming rivals with 10-year access deals to Xbox properties including Call of Duty, namely NVIDIA GeForce NOW, Boosteroid, and Ubitus.
The final decision is still set in April this year for the CMA but the whole path looks a lot clearer and easier for the completion of this deal to close by the May 2023 target set by Microsoft in US courts.
For more deal news as it happens check back with xboxera.com.