Math "flaw" hinders Microsoft's Activision Blizzard acquisition

Onur Demirkol
Mar 17, 2023

Microsoft still wants to complete its acquisition of Activision Blizzard, but more obstacles are getting in the way. Lastly, the company criticized the UK's Competition and Market Authority's math calculations on a financial model.

Currently, the biggest issue that Microsoft faces is Sony. Both the Japanese company and authorities think that if Microsoft acquires Activision Blizzard, it can withhold Call of Duty from PlayStation and profit by making the game enthusiasts turn their attention to Xbox.

The UK CMA published a financial model based on Microsoft's profits and losses from Xbox, including hardware, subscriptions, and games throughout a five-year span. The CMA's point was to prove that the company could make profit by withholding Call of Duty from PlayStation.

However, Microsoft doesn't accept the report and says the method is flawed because the results cover profits for five years while losses are on just a one-year basis. Microsoft thinks the math is just bad, and it "massively skews the result."

According to The Verge, “Unfortunately, there are clear errors in the figures being used to value the small number of Sony customers who might move to Xbox in the absence of Call of Duty (CoD). As we’ve always said, any realistic modeling of the true cost of removing CoD from PlayStation players clearly demonstrates that there is absolutely no financial incentive for us to do so. Which is why we have repeatedly said we won’t. Our actions demonstrate that we want to bring more games to more people, not less.” says Rima Alaily, corporate vice president and deputy general counsel for Microsoft.

Microsoft's billion-dollar acquisition deal with Activision Blizzard is facing major setbacks due to a math "flaw" by the UK CMA.

Sony says Microsoft can "degrade" the quality of CoD

On the other hand, Sony says that even if Microsoft doesn't withhold the game, it could strategically degrade the quality and performance of Call of Duty on PlayStation. According to Sony's CMA filing, Microsoft's  Phil Spencer revealed that the acquisition of Bethesda a couple of years ago was to deliver exclusive games for Xbox. The Japanese company says Microsoft's current promises don't match its behavior in the Bethesda case.

Recently, Microsoft was given access to look at Sony's confidential files of the SVO of finance Lin Tao, SVP of platform experience Hideaki Nishion, and the in-house antitrust lawyer Greg McCurdy. The Federal Trade Commission gave Microsoft to see how much Sony has been paying some game publishers to keep their games off of Xbox Game Pass.

It looks like the lawsuit will continue for a little longer as both parties are not even near an agreement. Moreover, the UK CMA's financial report might have started a new argument, and the result of that will be critical. Microsoft recently recruited Nintendo and Nvidia, trying to ease regulator concerns. At the end of the day, regulators must approve the deal, and even though Sony and Microsoft agree on a deal, it doesn't mean that the case is over.


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