Brazil’s competition watchdog, the Administrative Council for Economic Defense (CADE) has approved the Microsoft and Activision Blizzard merger without restriction, citing PlayStation’s already dominant position within the video game industry and Nintendo’s ability to compete without relying on franchises such as Call of Duty.
In a long public filing, CADE touched on PlayStation’s portfolio of exclusives, saying, “Investment in exclusive content is, and always has been, very important for the competitive dynamics in the console segment. Exclusive content was, most likely, one of the main factors responsible for positioning the PlayStation as a leader in the world console market for more than two decades, a leadership that continues to this day.”
CADE also mentions that Nintendo employs a similar strategy with exclusive content while noting that Microsoft doesn’t seem to sell as many consoles as PlayStation and Nintendo either. Of course, one of the biggest concerns about Microsoft’s acquisition is the multiplatform status of Call of Duty.
“As already seen, Nintendo does not currently rely on any content from Activision Blizzard to compete in the market,” CADE explains. “In turn, Sony has several attributes – strength of the world’s leading brand for more than 20 years, extensive experience in the sector, largest user base, largest install base of consoles, robust catalog of exclusive games, partnerships with multiple publishers, third-party, brand loyal consumers, etc. – which should contribute to maintaining the competitiveness of PlayStation in a possible post-Operation scenario, even in the face of possible loss of access to Activision Blizzard content.”
The watchdog says that it’s certainly possible that if Call of Duty were to become exclusive to the Microsoft ecosystem, many PlayStation players would migrate over to Xbox or PC in order to continue having access to the franchise.
Call of Duty would lose players and revenue in the short term due to this strategy, as well as invariably lead many players to favor multiplatform shooters such as Rainbow Six and Battlefield. Even EA CEO Andrew Wilson said a few weeks ago that Call of Duty potentially becoming Microsoft exclusive could benefit the Battlefield franchise.
However, this approach would ultimately lead to more Xbox console sales and Game Pass subscribers down the line, as well as give Microsoft a big competitive edge within the video game market.
Ultimately, CADE concluded that its objective is to protect Brazilian consumers, not the interests of PlayStation’s. CADE says, “In this sense, although it is recognized that part of PlayStation users may decide to migrate to Xbox in the event that Activision Blizzard games – and especially Call of Duty – become exclusive to the Microsoft ecosystem, SG/Cade does not believe that such a possibility represents, in itself, a risk to competition in the console market as a whole.”
This is an early hurdle passed for Microsoft, but the acquisition will still face scrutiny from the UK government, various U.S. senators, the city of New York, and the U.S. Justice Department. While stockholders of Activision Blizzard approved the deal in April, there’s still much debate on its merits or potential problems.
George Yang is a freelance writer for IGN. You can follow him on Twitter @yinyangfooey