The Brazilian Merger Control Authority (CADE), its real name, is the equivalent of the competition authority here. As with all major acquisitions having an impact on the Brazilian market, it was called upon to comment on the case of Microsoft, which is beginning to accumulate purchases from video game players. It was yesterday that she gave her opinion. His reasoning relates both to the possible distortion of competition caused by the hypothetical abandonment of Sony consoles for the Call of Duty franchise, but also to the protection of the Brazilian consumer.
“Given the immense popularity of Call of Duty, it is reasonable to conclude that Activision Blizzard games would no longer be available on Sony consoles, forcing players of the franchise to migrate to Xbox consoles or PC.”
“On the other hand, it’s reasonable to assume that if Call of Duty were to become exclusive to the Microsoft ecosystem, Sony-loyal gamers would simply abandon the franchise, in favor of other games available on their favorite console.”
“Despite everything, it cannot be ruled out that Microsoft may consider that a strategy of exclusivity of Activision Blizzard games is favorable to it, even if this decision could lead to the loss of a substantial share of sales, users and even the popularity of Call of Duty”
“This is because, in theory, such a strategy could help boost Xbox sales, democratize Game Pass, and solidify Microsoft’s ecosystem, all of which would offset losses from lower sales in the short term.”
“Exclusive games are the mainstay of competition between Microsoft and Sony, although neither company has managed to develop or acquire an exclusive that gives it a decisive advantage in the console market. Proprietary games are indeed less popular and generate fewer sales than AAAs developed by third-party companies, which are so far still available on both Xbox and PlayStation.”
“As we’ve seen, Nintendo doesn’t rely on Activision Blizzard games to secure market share. For its part, Sony has several assets due to its dominant position on the market for more than twenty years, its experience in the sector, its largest player base on the market, its catalog of exclusivities, its commercial partnerships with large publishers, and a loyal consumer base. All this should allow Sony to maintain its competitiveness even in the scenario of the acquisition by Microsoft, including if the content of Activision Blizzard is now closed to it.
“It is important to emphasize that the central objective of CADE is the protection of competition in order to best protect the interests of the Brazilian consumer, and not to protect the specific interests of a company in a competitive market.”
“In this sense, although it must be conceded that a share of PlayStation users may decide to migrate to Xbox in the event that Activision Blizzard games, and in particular Call of Duty, become exclusive to the Microsoft ecosystem, the CADE does not believe that this possibility in itself represents a distortion of competition in the console market.”
This is why CADE has decided to give a favorable opinion on the takeover planned by Microsoft. It is only the second competition authority to do so, after Saudi Arabia in August. The US Federal Trade Commission is expected to issue its opinion at the end of November, when the British authority has decided to examine the consequences of this takeover in more depth, and will issue its opinion on March 1, 2023 at the latest. The European Commission, for its part, has set November 8 as the deadline for examining this acquisition.
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