Although Sony earlier expressed to have deep concerns about the purchase by stating that the Call of Duty franchise is irreplaceable in the shooter genre and that Xbox exclusivity might very well influence console purchases, the Brazilian competition authority (CADE) has now approved the translation without any restrictions or concessions. This is rather interesting since the Brazilian authority is considered one of the more critical authorities. Aside from approving the deal, the authority also mentioned that it’s not their job to protect Sony’s or PlayStation’s position or interests in the market. In addition, the response from Brazil notes that, even if Microsoft would make the Call of Duty or Activision library exclusive to Xbox, they don’t believe it would make the market anti-competitive. “With regard to the possibility of foreclosure in downstream markets, the analysis pointed out that, despite their relevance and popularity, Activision Blizzard’s games - and especially the Call of Duty series - would not be essential assets for the activities of Microsoft’s current and potential competitors in the console and digital game distribution markets (considering, in the latter, both digital shops and subscription services for multiple PC and console games). Thus, even if Activision Blizzard’s game catalog were to become exclusive to Microsoft’s ecosystem after the Transaction, the SG/CADE considers that such exclusivity would not result in a substantial reduction in the levels of competition in the downstream markets, even if it could translate into a competitive advantage for Microsoft”, a roughly translated part of the decision reads. “It is also important to emphasize that the main objective of CADE’s actions is the protection of competition as a means to promote the welfare of the Brazilian consumer, and not the defense of particular interests of specific competitors”, Brazil’s antitrust regulator continued, “In this sense, even if it is acknowledged that part of the PlayStation console users (from Sony) could decide to migrate to Xbox in case Activision Blizzard’s games - and especially Call of Duty - become exclusive to Microsoft’s ecosystem, the SG/CADE does not believe that such possibility represents, by itself, a risk to competition in the console market as a whole. The response is quite extensive and can be read in full here. Please note that it’s written in Portuguese. With Brazil’s approval, it will be interesting to see how the other major regulators will handle the deal. As always, we will keep you updated.
