From IB:
The key issues are quite big, going to be interesting how MS proposes its remedies ("" = quotes, everything else is my comments):
- "giving rise to a realistic prospect of a substantial lessening of competition (SLC) in gaming consoles, multi-game subscription services, and cloud gaming services."
- "The console gaming market is highly concentrated"
- The data shows this clearly. The top 5 publishers take in 60%+ of the revenue/profits. Sony, Nintendo, Xbox likely take in 70% of all profit in console gaming. Platform holders have huge leading positions.
- "This evidence consistently pointed towards ABK’s content, especially Call of Duty, as being important and capable of making a material difference to the success of rivals’ gaming platforms. ABK invests significant time and capital in creating regular Call of Duty releases, which consistently rank as some of the most popular games. These titles require thousands of game developers and several years to complete, and there are very few other games of similar calibre or popularity."
- The biggest takeaway here. Sony was right. COD is considered so big it can significantly affect rivals ecosystem. Note they use evidence. They have the data to support this.
- Reiterating. MS saying okay we'll make COD on PS+ may not be enough. Delaying releases and imposing price licenses, such as we'll place COD on PS+ if Sony pays us billions every year, is input foreclosure
- "The CMA found that the potential strategic benefits to Microsoft of using ABK’s content to foreclose rivals— such as expanding the Game Pass user base and strengthening network effects in its gaming ecosystem—could outweigh any immediate losses in terms of licensing revenues."
- Another huge point that directly contradicts MS's words. CMA is saying the benefit of ATVI content being in some way exclusive can overcome any losses MS makes by making it exclusive in the short term.
- "CMA considers that Call of Duty is sufficiently important that losing access toit (or losing access on competitive terms) could significantly impact Sony’s revenues and user base. This impact is likely to be felt especially at the launch of the next generation of consoles, where gamers make fresh decisions about which console to buy. The CMA believes that the Merger could, therefore, significantly weaken Microsoft’s closest rival, to the detriment of overall competition in console gaming."
- "Absent the Merger, ABK games would in principle be available to any multi-game subscription service. The CMA recognises that ABK’s newest games are not currently available on any subscription service on the day of release but considers that this may change as subscription services continue to grow."
- As I've said, ABK is a direct competitor to MSFT in many ways and could be one of the biggest suppliers or publishers of game subscriptions. MSFT is buying out one of the biggest competitors/suppliers to restrict competition in that area.
- "By having a large and well-distributed cloud
infrastructure, Microsoft will be able to host games on its servers on preferential
terms and reach gamers throughout the world without having to pay a fee to third-
party cloud platforms. By having Windows, the OS where the vast majority of PC
games are played, Microsoft can stream games to Windows PCs without having to
pay an expensive Windows licensing fee and may be able to design and test games
made for Windows more effectively than rivals. And by having an existing console
ecosystem, Microsoft has an existing user base of gamers to which it can promote
its cloud gaming services, as well as a range of popular games that it can offer."
- "
This could result in increased
concentration in cloud gaming services or the market ‘tipping’ to Microsoft, and
ultimately deny consumers the benefits of competition between new and emerging
providers vying to succeed in cloud gaming. The CMA recognises that, if Microsoft
were to significantly increase its market power in cloud gaming services, this could
have knock-on effects on independent game developers and publishers who
compete against Microsoft’s own gaming portfolio, and who could be disadvantaged
in a number of ways, such as by having to pay higher fees or by being demoted on
Microsoft’s gaming ecosystem."
Imo, the CMA is not only asking for multiplat in sub services but multiplat with no extensive license restrictions. Furthermore, their notice on MS's monopoly in PC OS, PC gaming OS and a leading position in Azure is of concern.
Not sure how MS is going to appease them there, and the question is, is ATVI still worth it for MSFT at $70B, if pretty much their entire strong IP catalogue is forced to remain multiplat in every manner.
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Once a transaction has reached Phase 2 its chances of survival are low: 70% of cases have been blocked, unwound or abandoned since January 2019"
The UK’s merger control regime has remarkable similarities to a platypus: it confounds neat classifications. The answer to basic questions about the UK’s regime is both yes and no - is it voluntary? Is there an objective qualifying threshold? Other aspects of the UK’s unique regime allow the...
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