Brazilian Regulator Approves Xbox/Activision Deal Without Any Restrictions

Microsoft's proposed deal of Activision/Blizzard acquisition has been approved by Brazilian regulator CADE with no restrictions.

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Brazilian Regulator Approves Xbox/Activision Deal Without Any Restrictions

In a time of increasing consolidation within gaming industry, a proposed $68.7 billion worth of Activision/Blizzard acquisition deal by Microsoft is currently being scrutinized by regulators all around the world due to anti-trust concerns.

Earlier last month, Microsoft CEO Satya Nadella talked about how confident they are regarding regulatory approval. Among various global competition watchdogs, Brazil's regulatory body has already approved Activision/Blizzard buyout.

Brazil's Administrative Council for Economic Defense (CADE) agreed to Microsoft's anticipated Activision/Blizzard deal without restrictions. CADE has thoroughly inspected possible effects of this merger and finally reached a conclusion.

Briefly explaining their reasoning for such decision, CADE says that considering huge popularity of Call of Duty franchise, PlayStation users could move to Xbox or even PC to play those games if Activision games become excusive to Xbox.

However, they also considered that if Call of Duty games become Xbox-excusive in future, loyal PlayStation console fans could simply leave it behind and move on to other popular games that are available on their favorite console system.

Having to sacrifice a huge part of sales, Microsoft could end up adopting an exclusivity strategy on Activision/Blizzard games in future. It may boost Xbox console sales and expand Xbox Game Pass subscriber base to build up an ecosystem.

CADE stated that exclusive content is "very important" for in console market competition and a main factor in establishing Nintendo and PlayStation as market leaders, setting a benchmark of market competition between two major rivals.

However, Microsoft and SIE didn't acquire any exclusive rights to a game that decisively shifted power balance to favor a certain platform since proprietary exclusives are less popular and gets less revenue than known third-party AAA titles.

They also pointed out that Nintendo doesn't rely on any Activision/Blizzard content to compete as a market leader in gaming industry. In contrast, Sony has been a leading brand for more than 20 years with largest installed base of consoles.

Even if they lose access to Activision/Blizzard content, their loyal user base and huge catalog of exclusive games will help them to compete. After all, CADE's key-objective is to protect interest of Brazilian customers and not defense of Sony.

Although a faction of PlayStation console owners may decide to switch to rival platform Xbox if Activision/Blizzard games become exclusive to their ecosystem, CADE doesn't believe that such odds are any risk to overall market competition.

Brazil's CADE is the first among global regulatory bodies to approve Microsoft's proposed $68.7 billion takeover of Activision/Blizzard. UK competition regulators have set a deadline for March 2023 to publish their findings of ongoing inquiry.
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