Sony has criticised the UK’s Competition and Markets Authority (CMA) on its revised appraisal of Microsoft’s proposed acquisition of Activision Blizzard.
After five months of investigation, the UK regulator provisionally found in February thatthe deal could reduce competitionand “result in higher prices, fewer choices, or less innovation for UK gamers”.
However, a month later the CMA seeminglyreversed its decision, saying it had updated its provisional findings after receiving fresh evidence that alleviated some of its concerns about the $69 billion deal.
Sony‘s response, published today by the CMA, questions the regulator’s new stance.
“The CMA’s reversal of its position on its consoles theory of harm is surprising, unprecedented, and irrational”, Sony’s response reads.
ThePlayStationcompany argues that the CMA had “assessed a significant body of evidence” to come to its initial conclusion where it had suggested there would be an issue with the acquisition.
It adds that the CMA’s new “diametrically opposite approach” is based “almost exclusively on a single economic model on which it places ‘significantly more weight’ than other available evidence”.
Specifically, it claims that the CMA’s new findings are based on a new ‘lifetime value’ model, which shows how much an average player is worth to a company over time.
It says the new model suggestsMicrosoftwould see a “significant financial loss” if it kept Call of Duty exclusive toXbox, and that therefore there was no incentive to keep it off PlayStation.
However, Sony claims the new data the CMA was using was flawed, and that if the “errors” were to be corrected then the gains Microsoft would get from players switching to Xbox would be “three times as high as the lifetime value of an average PlayStation user”.
Sony’s response also claims that:
Sony’s argument concludes that “the addendum does not justify the CMA’s U-turn on the consoles theory of harm”.
“To reach a robust decision, the CMA should revisit its analysis of Microsoft’s incentives and partial foreclosure, correcting for the errors identified in this paper,” it says.
Further reading
In a bid to gain approval for the deal, Microsoft has told regulators it’s willing tomake each new Call of Duty game available on PlayStationthe same day it comes to Xbox for a 10-year period,with full content and feature parity.
In an attempt to address concerns about the impact the merger will have on the cloud gaming market, Microsoft also recentlyannounced several dealsto bring Call of Duty to third-party cloud gaming platforms should the acquisition be approved.
The CMA’s final report ruling on theActivision Blizzarddeal is due by April 26.
