It was the investigation by the Brazilian authorities that began to deliver details and exchanges between Xbox and PlayStation, and it has just been completed. This time, it’s official, Brazil validates the takeover of Activision by Microsoft.
Brazil approves the deal between Microsoft and Activision Blizard King
The Economic Defense Board of Directors (CADE) therefore decided last night, and sees no obstacle to Microsoft offering Activision Blizzard for nearly 69 billion dollars.
This is the second validation of the takeover, the first having been made by Saudi Arabia during the summer. As a reminder, responses from Europe and the USA are expected in November, while the British authorities will deliver their verdict in March 2023.
The Brazilian authorities therefore believe that competition will not be distorted if Microsoft offers Activision Blizzard and King. In their arguments, they also evoke precisely the competitors in the sector, scratching in passing some of Sony’s arguments for PlayStation.
Call of Duty exclusivity wouldn’t be a problem
The conclusions of the Brazilian report indicate that the concentration of the video game sector generated by this historic takeover would be less than 20%. It is also specified that “Activision Blizzard games – and in particular the Call of Duty series – would not be essential assets to the performance of current games and potential competitors in the console and digital game distribution markets”.
The case of Call of Duty has therefore been studied, and the authorities indicate that even if this license were to become exclusive to the Xbox ecosystem, it would not hinder market competition.
Even if the Activision Blizzard games catalog became exclusive to the Microsoft ecosystem after the transaction, SG/Cade considers that such exclusivity would not lead to a substantial reduction in the levels of competition in downstream markets, even if it could translate into a competitive advantage for Microsoft.
Point number 5 of the conclusion is the one which, implicitly, evokes the case of Sony which largely tried to derail the deal.
Furthermore, it is important to emphasize that the central objective of CADE’s activities is the protection of competition as a means of promoting the welfare of Brazilian consumers, and not the defense of the particular interests of specific competitors.
In this sense, if it is recognized that some users of PlayStation consoles (from Sony) could decide to migrate to Xbox in the event that Activision Blizzard games – and in particular Call of Duty – become exclusive to the ecosystem Microsoft, SG/Cade do not believe that such a possibility represents, in itself, a risk for competition in the overall console market.
CADE admits, however, that exclusive games are a benchmark of competition between Microsoft and Sony, “although no company has so far developed or acquired an exclusive game that has definitively tipped the balance in favor of ‘a console “. The substantiated report correctly states that “first-party exclusive games are less popular and represent less revenue than third-party AAA games, which until now were available on Xbox and PlayStation. »
The report therefore concludes that there would be “no significant risk for competition” if the takeover were effective. He adds that “the market shares held by the Parties in these segments, in all the scenarios examined, are well below the minimum percentage considered for the purposes of the presumption of the possibility of market closure, as defined in Article 8, IV of CADE resolution no. 33/2022. ».