Brazil has approved Microsoft’s proposed acquisition of Activision Blizzard, bringing the Windows and Xbox maker one step closer to owning one of the biggest video game holding companies in the world. New documentation issued by the country’s Administrative Council for Economic Defence (CADE) this week can confirm the approval, with one of the major justifications being that Call of Duty isn’t on Steam nor Nintendo Switch, yet neither of those platforms are struggling.
Despite Microsoft having control of a relevant portion of the console and digital game distribution markets (downstream), the company would not have incentives to make it difficult for publishers competing with Activision Blizzard to access its platforms, as this would necessarily imply a reduction, in quantity and variety, of the catalogue of games available in the Xbox ecosystem, making the company’s products and services less attractive to consumers.
With regard to the possibility of closing downstream markets, the analysis pointed out that, despite their relevance and popularity, Activision Blizzard games – and in particular the Call of Duty series – would not be essential assets to the performance of Microsoft’s current and potential competitors in the console and digital game distribution markets (considering, in the latter, both digital stores and multiple game subscription services for PC and consoles).
Thus, even if the Activision Blizzard game catalogue were to become exclusive to the Microsoft ecosystem after the Transaction, SG/Cade considers that such exclusivity would not result in a substantial reduction in the levels of competition in the downstream markets, even if it could translate into a competitive advantage for Microsoft.
Microsoft’s proposed acquisition of Activision Blizzard still has various hurdles to overcome, including a second-phase investigation by the UK’s Competition and Markets Authority (CMA), which has been given a March deadline. Xbox launched a site this week to advertise some of the claimed benefits of the buyout, including more games on more devices and greater competition versus Sony and Nintendo.