UK's Microsoft-Activision probe to focus on game exclusivity
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The UK's antitrust regulator has laid out the issues it will take up in its detailed review of Microsoft's (NASDAQ:MSFT) $69B deal to acquire Activision Blizzard (NASDAQ:ATVI) - and it's indicated that it will take a hard look at Microsoft's assertions in the case.

In particular, public attention is focusing on whether Microsoft could decide to make perennial best-selling franchise Call of Duty an Xbox exclusive, pulling it from rival Sony's (NYSE:SONY) PlayStation - and that's on the mind of the Competition and Markets Authority in Friday's issues statement.
Among its "theories of harm" - areas where a merger could result in a "substantial lessening of competition" - the CMA points to two in particular. First, "Microsoft withholding or degrading Activisionâs content â including popular games such as CoD â from other consoles or multi-game subscription services."
The other focus is on cloud gaming: "Microsoft leveraging its broader ecosystem together with Activisionâs game catalog to strengthen network effects, raise barriers to entry and ultimately foreclose rivals in cloud gaming services."
Activision content is "an important input for PlayStation," the CMA says. "An economically significant number of PlayStation gamers could switch to Xbox if Activisionâs content were no longer available (or not available on equal terms) on PlayStation."
As for whether Microsoft would actually do that: "Financial modeling of the Merger suggests that the Merged Entityâs incentive to foreclose Sony may be considerably stronger than suggested by the Parties," and "Microsoftâs past business practices suggest that it may be willing to make losses in the short term in order to build scale and increase its user base."
And on cloud gaming, the CMA is looking at whether a merged Microsoft/Activision could pursue strategies like making Activision content exclusive to Xbox Game pass, or delaying its appearance on rival subscription services; degrading the quality of content on rival services, or making some features exclusive to Xbox Game Pass; and/or simply boosting the wholesale price of its content on rival services.
"Microsoft has publicly stated that one of the most important reasons behind the Merger is to add Activisionâs content to Game Pass to differentiate it from other multi-game subscription services, suggesting that it could have the incentive to make Activisionâs content exclusive to Game Pass," the CMA said.
Just before midday Friday, Microsoft stock (MSFT) was 1.2% lower and Activision Blizzard (ATVI) was down 0.6%.
With Wednesday's publication of the full text of the CMA's decision to move to a deep probe, Microsoft (MSFT) charged the agency with incorrectly relying on "self-serving statements by Sony" exaggerating the importance of Call of Duty.