Recently, UK’s Competition and Markets Authority (CMA) suddenly changed its mind and revised its appraisal of Microsoft’s proposed acquisition of Activision Blizzard. It has reversed its decision saying that the merger would not actually lessen competition and it seems the deal has been given the green signal now. As expected, Sony reacted quite “violently” when they heard the news.
“The CMA’s reversal of its position on its consoles theory of harm is surprising, unprecedented, and irrational”, said Sony in its recent document that it submitted in response to the new change of heart.
Sony says that CMA has already gotten a “significant body of evidence” and had assessed that there would be an issue with the merger. Still, this new approach is quite the opposite and was only based on a single economic model that had placed significant weight instead of the previous evidence they have assessed.
The PlayStation company also claims that the new data CMA is currently using is flawed. If the errors were corrected then Microsoft’s gains from players switching to Xbox would be three times as high compared to the lifetime value of an average PlayStation user.
CEO Jim Ryan also explained to the CMA at the Remedies Hearing that if PlayStation received a degraded version of Call of Duty, it would “seriously damage our reputation. Our games would desert our platform in droves and network effects would exacerbate the problem. Our business would never recover.”
Sony claims that the CMA actually ignored his statement and assumed that even a degraded version of the Call of Duty series on PlayStation would not cause gamers to switch from PlayStation to Xbox.