In its ongoing back-and-forth with UK regulator the Competition Markets Authority (CMA), Microsoft has claimed that neither Activision nor Call of Duty have “significant market power.”
The Xbox maker is currently attempting to convince the CMA, which is investigating its proposed $68.7 billion acquisition of Activision Blizzard, that its concerns surrounding the deal are misplaced.
There’s been a lot of chatter between the two groups, but the short version is that the CMA is worried the purchase will allow Microsoft to dominate the video game market by giving it the power to make popular Activision Blizzard franchises exclusive to Xbox, placing rivals like Sony at a significant disadvantage.
In its previous rebuttals, Microsoft described the CMA’s concerns as “misplaced” and said that Sony has been issuing “self-serving statements” in a bid to block the deal. Notably, Microsoft previously stated that Sony is currently the market leader in the games industry, and that it has a “clear ability to competitively respond” to the potential Activision Blizzard deal.
In another statement sent by Microsoft to the CMA on October 31, 2022 – which has only recently been published – the console maker then attempted to downplay the importance of the Call of Duty franchise itself, describing assertions by the CMA that the shooter series is of critical importance to the wider game market as “false by any objective measure.”
“Activision content is popular and loved by millions of gamers worldwide. That said, neither Activision nor Call of Duty have significant market power or the status of an ‘important input,'” wrote Microsoft. “All of the CMA’s theories of harm in this case are premised on one overarching concern: that Activision’s game catalogue – in particular the Call of Duty franchise – is so important that it will enable Xbox to foreclose its competitors in gaming. But that is false by any objective measure.”
Loved by millions, but not “unique”
In a bid to prove that point, Microsoft added that Activision’s share in console game publishing is “very low,” and said that its share based on monthly active users (MAUs) for console games is only approximately between 10 percent to 20 percent.
“Activision published only two of the top 20 console titles in the UK in 2021 and its share of so-called ‘AAA’ console games is equally low,” Microsoft continued. “Even focusing narrowly on the ‘shooter’ genre, Activision would not have the necessary market power to foreclose the downstream market, as the genre accounts for less than a quarter of console publishing revenues.
“Given the incredible array of popular and diverse gaming content that is available to market participants, no title or publisher has ever had sufficient market power in the 30-plus years of console gaming to lead to competitive foreclosure.”
Microsoft also insisted that Call of Duty isn’t “unique” compared to many other games and franchises which are “loved by gamers worldwide,” and suggested the franchise is consistently outranked in Game of the Year user polls on PlayStation and on Metacritic when compared with other titles.
Microsoft, of course, sent its rebuttal to the CMA because Activision Blizzard announced that the latest entry in the Call of Duty franchise, Modern Warfare II, earned over $1 billion in 10 days. Earlier this week, the publisher added that Call of Duty’s free battle royale mode, Warzone 2.0, has attracted 25 million players in five days.
The CMA isn’t the only regulator that has raised eyebrows at the prospect of Activision Blizzard being purchased by Microsoft. Yesterday, it was reported that U.S. regulator the Federal Trade Commission is “likely” planning a lawsuit that will attempt to halt the acquisition.
Other regulators have been more amenable, however, at the deal has already been approved in Brazil and Saudi Arabia