Microsoft closer to Call of Duty merger

THE competition watchdog has removed a key hurdle to Microsoft’s $69bn (£56bn) merger with Call of Duty

maker Activision Blizzard, marking a significant climbdown in its investigation.

The Competition and Markets Authority (CMA) admitted that “new evidence” from Microsoft had dispelled its provisional conclusion that the merger represented a competition risk to the video games console market.

Microsoft, which makes Xbox games consoles, has been in talks with regulators to secure a deal for Activision Blizzard. The CMA has threatened to block the deal entirely and has considered forcing Microsoft to sell the Call of Duty franchise before approving any takeover.

Rival Sony, which develops Playstation consoles, has argued the merger could allow Microsoft to cut it off from future Call of Duty

game releases. It is the bestselling video game franchise on Playstation, selling tens of millions of copies every year.

Playstation has consistently outsold Microsoft’s Xbox. However, the CMA said new data provided by Microsoft showed a strategy to cut off Sony would be “significantly loss-making” for the tech giant.

The CMA had originally concluded the strategy would make a profit since gamers would quit Playstation and buy an Xbox. But Microsoft argued the regulator had made a “fundamental and obvious error”, compar- ing five years of potential profits for each new gamer who switched to Xbox, to just a single year of losses for each gamer who decided to stick with Playstation and stopped buying Call of Duty.

Martin Coleman, chairman of the investigation panel, said the deal would not reduce competition for console sales “because the cost to Microsoft of withholding Call of Duty from Playstation would outweigh any gains”.

Microsoft offered Sony a deal that includes a 10-year licence to keep Call of Duty on the Playstation, and has signed similar deals with Nintendo and Nvidia.

The CMA’S investigation will continue and the deal still faces competition inquiries in the US and Europe.