Neither Activision nor its games are important enough to destabilize the gaming market in the United Kingdom, Microsoft said in a legal document in October. The statement came in response to an investigation by the U.K.s Competition and Markets Authority (CMA), which highlighted concerns about how the merger between Microsoft and Activision could affect competition in the gaming industry.
Earlier this year, the UKs CMA started investigating the anticipated acquisition of Activision Blizzard by Microsoft Corporation. In September, the CMA said Microsoft’s acquisition of Activision Blizzard may affect Sony, the companys competitor within the country.
In Microsofts response to the CMA, the company belies this claim by presenting Activisions data and statistics, even claiming that the companys games are not important enough to make or break their competitors on the market.
The first ruling from the CMA said Activision Blizzard’s transition to Microsoft might result in substantial lessening of competition within the UK markets. However, in response to the statement, Microsoft released a thorough document that seems to disprove those claimsstarting with Activisions limited shares and Call of Duty‘s minor market power.
Activisions titles have gained popularity across the years, but millions of console gamers worldwide constitute a mere 10-20 percent of the whole market. Even focussing narrowly on the shooter genre, Activision would not have the necessary market power to foreclose the downstream market,” Microsoft said, adding that the genre accounts for less than a quarter of console publishing revenues.
Microsoft tore the long and extensive Call of Duty franchise to shreds by using its own numbers and saying it lacked uniqueness in the gaming industry. The company named just a few examples that highlight the poor performance of the game in the gaming market, saying the franchise was “consistently outranked” in a series of criteriaincluding Metacritic scores, user polls on PlayStation, and its unpopularity on social media.
Even if Microsoft were to withdraw or degrade Call of Duty from/on PlayStation, the Panel would have to believe that Sony would go from being the clear market leader for over two decades to being placed at such a disadvantage that [its] ability to compete is substantially limited, the document reads. This is not plausible.
But the downgrade of Call of Duty did not stop at just the game. In its document, Microsoft said most gamers on consoles do not play Call of Duty, and added that the game itself is just a small portion of the overall gaming consumption for players. Additionally, according to Microsoft, Call of Duty gamers are neither special nor unique in terms of either their spending or user engagement when compared to other gamers favoring other game franchises.
Microsoft also said the merged entity that will be born with the acquisition of Activision will not have significant upstream market power. The CMA will now have to review the document released by Microsoft in the second phase of its investigation.