South Africa green-lights Microsoft’s R1.25-trillion Activision Blizzard deal
South Africa’s Competition Commission has recommended that the Competition Tribunal approve Microsoft’s proposed acquisition of Activision Blizzard, without conditions.
Microsoft first announced it agreed to buy the blockbuster game studio for $68.7 billion (R1.25 trillion) in January 2022.
Activision Blizzard is known for lucrative properties like Call of Duty, Diablo, Warcraft, Starcraft, and Overwatch.
The deal would see Microsoft leapfrog Chinese mobile gaming giant Tencent to become the world’s third-largest gaming company, behind Nintendo and Sony.
Microsoft has faced intense regulatory scrutiny over the deal in several countries, primarily over concerns from Sony about the possible consequences of the transaction for Call of Duty’s continued existence on the latter’s PlayStation consoles.
The Competition Commission acknowledged the primary completion concern in the transaction was whether it might lead to Microsoft restricting the distribution of Call of Duty to the Xbox or making the game available on terms that exclude or undermine the ability of other console manufacturers to compete.
However, it concluded that Microsoft had no ability or incentive to take or keep Call of Duty off Sony or other rivals’ platforms.
In addition, the commission pointed out that Microsoft and Activision Blizzard had undertaken to continue supplying Call of Duty games to other console manufacturers.
“The commission found that the proposed transaction is unlikely to result in a substantial prevention or lessening of competition in any relevant markets,” it stated.
It also found that the proposed transaction would not raise substantial public interest concerns.
Screenshot from Call of Duty: Modern Warfare 2
If the Competition Tribunal approves the deal, South Africa will become the sixth country to clear it, joining Brazil, Chile, Japan, Serbia, and Saudi Arabia.
The United Kingdom’s Competition and Markets Authority has also given its provisional stamp of approval for the transaction.
It recently sided with Microsoft on its argument that removing Call of Duty from PlayStation would cost it more than it could gain.
Reuters has also reported that the European Union’s regulators will clear the deal in an announcement scheduled for 25 April 2023.
On its home turf, however, Microsoft is set to face off against the US Federal Trade Commission, which sued to block Microsoft from making the acquisition. Those hearings are only set to start in August 2023.
The FTC argues that if the transaction went ahead, Microsoft could monopolise the games market and hurt rivals like Nintendo or Sony.
Microsoft has signed deals with Nintendo and cloud gaming providers Nvidia and Boosteroid to make Call of Duty available on their platforms for ten years after the deal is sealed.
Sony has continued to oppose the deal and refused to accept that same offer, alleging that Microsoft would deliberately sabotage the PlayStation versions of Call of Duty with bugs and errors.
Many experts have argued that Sony’s arguments are ironic, coming from a company that has derived much of its success from its PlayStation exclusives.
Microsoft has also accused Sony of paying blocking rights to developers to keep their games off the Microsoft Game Pass subscription service.
Google and Nvidia have expressed support for the deal’s approval. At the same time, major game publishers like Bandai Namco, Riot Games, Ubisoft, and Warner Bros. don’t anticipate it will have an anti-competitive effect.
Amazon, Apple, and Meta have also submitted to Brazil’s national competition regulator that they were not too concerned about the impact of the acquisition on competition in the industry.
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