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PlayStation Is Gaming Industry's Leader, Microsoft Says, As EU Opens New Investigation Into Activision Blizzard Deal

PlayStation, not Xbox, is the current leader in the gaming world, Microsoft says.


The European Union's European Commission has launched an "in-depth investigation" into Microsoft's proposed acquisition of Activision Blizzard, saying it has concerns that Microsoft's bid for the Call of Duty company could reduce competition for video games. In response, Microsoft reminded the Commission and everyone else that Sony remains the market leader for gaming via PlayStation and that concerns about Call of Duty becoming an Xbox-exclusive are unfounded.

"The Commission's preliminary investigation shows that the transaction may significantly reduce competition on the markets for the distribution of console and PC video games, including multi-game subscription services and/or cloud game streaming services, and for PC operating systems," the Commission said in a news release.

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Specifically, the Commission said it has concerns that, should Microsoft be allowed to buy Activision Blizzard, the company could "foreclose access" to Activision Blizzard's console and PC games, including Call of Duty. In this case, "foreclose" refers to making something "exclusive."

"The preliminary investigation suggests that Microsoft may have the ability, as well as a potential economic incentive, to engage in foreclosure strategies vis-à-vis Microsoft's rival distributors of console video games, such as preventing these companies from distributing Activision Blizzard's console video games on consoles or degrading the terms and conditions for their use of or access to these video games," the Commission said.

For multi-game subscription service and cloud game streaming services, the Commission is similarly concerned about exclusivity issues that could lead to competition concerns.

"The Commission is concerned that, by acquiring Activision Blizzard, Microsoft may foreclose access, to the detriment of its rival distributors of console and PC video games that offer such services, to its own PC and console video games, which are key for the provision of the nascent services of multi-game subscription and cloud game streaming," the Commission said.

This level of "foreclosure strategies" might reduce competition, which in turn could lead to "higher prices, lower quality, and less innovation for console game distributors, which may in turn be passed on to consumers," the Commission said.

The Commission further stated that it has concerns that Microsoft's proposed buyout of Activision Blizzard could have an effect on the PC hardware marketplace.

"In particular, the Commission is concerned that Microsoft may reduce the ability of rival providers of PC operating systems to compete with Microsoft's operating system Windows, by combining Activision Blizzard's games and Microsoft's distribution of games via cloud game streaming to Windows. This would discourage users to buy non-Windows PCs," the Commission said.

The Commission is now underway on its investigation into these concerns and has 90 working days--ending March 23, 2023--to make a decision.

The Commission's Margrethe Vestager said the group is trying to ensure that Microsoft's buyout of Activision Blizzard, should it be accepted, would not lead to a world in which Microsoft can dominate beyond what is reasonable.

"We must ensure that opportunities remain for future and existing distributors of PC and console video games, as well as for rival suppliers of PC operating systems. The point is to ensure that the gaming ecosystem remains vibrant to the benefit of users in a sector that is evolving at a fast pace," Vestager said. "Our in-depth investigation will assess how the deal affects the gaming supply chain."

Microsoft said in a statement to The Verge that it continues to work with the European Commission to determine the "next steps" and to "address and valid marketplace concerns."

"Sony, as the industry leader, says it is worried about Call of Duty, but we've said we are committed to making the same game available on the same day on both Xbox and PlayStation," Microsoft said. "We want people to have more access to games, not less."

The UK is also investigating the proposed sale of Activision Blizzard to Microsoft, along with other regulatory bodies around the world.

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