Microsoft has cleared one major hurdle in its proposed acquisition of Activision Blizzard. The UK CMA recently updated its provisional findings stating that it does not find a significant reduction of competition if Microsoft eventually makes Call of Duty an Xbox-exclusive title.
The UK Competition and Markets Authority announced that it had updated the provisional findings on the merger between Microsoft and Activision after receiving new evidence that assuaged some of its concerns.
The anti-trust regulator initially found that Microsoft would unfairly benefit from making Call of Duty an exclusive title. The competition watchdog suggested that Microsoft divest the portion of Activision Blizzard that dealt with the Call of Duty franchise to have the deal approved.
"Provisional findings are a key aspect of the merger process and are explicitly designed to give the businesses involved, and any interested third parties, the chance to respond with new evidence before we make a final decision," Martin Coleman, chair of the independent panel conducting the CMA investigation said.
"Having considered the additional evidence provided, we have now provisionally concluded that the merger will not result in a substantial lessening of competition in console gaming services because the cost to Microsoft of withholding Call of Duty from PlayStation would outweigh any gains from taking such action."
Sony argued that making Call of Duty an exclusive title gave Microsoft an unfair advantage. According to the PlayStation maker, the popular shooter franchise is "irreplaceable" and other titles such as Battlefield cannot keep up.
Microsoft countered this by offering ten-year licensing deals to Sony, Nintendo, and Steam for the Call of Duty series. The tech giant also said that it does not make business sense to withhold the title from the biggest console maker on the planet.
While Microsoft has hurdled the issue with Call of Duty, the UK CMA still has some concerns pertaining to cloud gaming.
"Our provisional view that this deal raises concerns in the cloud gaming market is not affected by today’s announcement. Our investigation remains on course for completion by the end of April," the antitrust watchdog said.
Microsoft and Activision welcomed this new development in the UK CMA’s investigation into the merger.
"We appreciate the CMA’s rigorous and thorough evaluation of the evidence and welcome its updated provisional findings," a Microsoft spokesperson said in a statement to CNBC. "This deal will provide more players with more choice in how they play Call of Duty and their favorite games. We look forward to working with the CMA to resolve any outstanding concerns."
An Activision Blizzard spokesperson stated that the updated provisional findings "show an improved understanding of the console gaming market and demonstrate a commitment to supporting players and competition."
The statement adds, "Sony’s campaign to protect its dominance by blocking our merger can’t overcome the facts, and Microsoft has already presented effective and enforceable remedies to address each of the CMA’s remaining concerns. We know this deal will benefit competition, innovation, and consumers in the UK."
The UK CMA has until April 26 to finalize its decision on the landmark deal.