February 26. 2024. 5:56

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UK competition regulator opposes Microsoft-Activision merger


The UK’s Competition and Markets Authority (CMA) has found that Microsoft’s proposed acquisition of gaming company Activision Blizzard could harm competition across multiple markets.

The CMA’s provisional conclusions, issued on Wednesday (8 February), found that the deal would likely impact competition in cloud gaming services and the supply of consoles.

The provisional findings come after five months of investigation into the $69 billion deal, announced in January 2022 and cover antitrust concerns regarding the supply of both cloud gaming services and consoles.

The merger has proved controversial, attracting regulatory scrutiny from several other authorities, including in Brussels and Washington.

The CMA is now seeking input from the companies involved, as well as comments from interested parties ahead of its final report on the acquisition, due by 26 April.

UK moves forward with Microsoft-Activision competition inquiry

The UK competition authority will advance a probe into Microsoft’s acquisition of gaming company Activision Blizzard, it announced on Thursday (1 September).

Following the launch of initial proceedings looking into the deal last July, the CMA in September announced that it would move ahead with a formal investigation into what would be Microsoft’s largest acquisition to date.

The purchase would make the tech giant one of the largest gaming companies by revenue, which prompted concerns from the UK watchdog that control by Microsoft over Activision’s most popular games, such as Call of Duty, could harm rivals and lead to industry dominance.

The CMA said that its investigation indicated that it would benefit Microsoft to make Activision’s games exclusive to, or available at a much higher quality on, its own cloud gaming service.

Given Microsoft’s existing presence in this market, including its ownership of Xbox, Azure and Windows, the regulator concluded that buying an already powerful gaming company would reduce competition, potentially harming UK gamers and impacting the future of the gaming environment.

The UK regulator also found that a small number of high-profile games, including Call of Duty, are key in driving competition between different consoles and that it would likely be to Microsoft’s commercial advantage to make Activision’s games again either only available on its own consoles or available on others, but under materially worse conditions.

The CMA noted that buying game studios and then making their content available only on Microsoft’s own platforms has been a strategy used by the company before in previous purchases.

Given the close competition between Xbox and Sony-owned PlayStation, Microsoft’s ability to gatekeep access to games such as Call of Duty could, the CMA said, lead to higher prices and lower quality for UK gamers over time.

In a statement of possible remedies, the CMA suggested that Microsoft could ensure that games such as Call of Duty are available to other platforms after the merger.

“We are committed to offering effective and easily enforceable solutions that address the CMA’s concerns,” said Rima Alaily, Microsoft’s Corporate Vice President and Deputy General Counsel, in response to the CMA’s findings.

“Our commitment to grant long-term 100% equal access to Call of Duty to Sony, Nintendo, Steam and others preserves the deal’s benefits to gamers and developers and increases competition in the market. 75% of respondents to the CMA‘s public consultation agree that this deal is good for competition in UK gaming.”

The UK is not the only jurisdiction in which concerns about the merger have been raised. In December, the US Federal Trade Commission issued a complaint requesting that the deal be blocked, referring to what it described as “Microsoft’s record of acquiring and using valuable gaming content to suppress competition from rival consoles”.

The EU launched its own full-scale investigation into the deal in November after Microsoft chose not to put forward any proposed concessions to alleviate preliminary concerns outlined by the European Commission.

According to media reports, Microsoft received a statement of objections from the EU antitrust authority last week, marking the start of the second phase of the investigation.

Commission launches probe into Microsoft’s $69bn Activision Blizzard takeover

The EU competition authority announced on Tuesday (8 November) the opening of an in-depth investigation concerning Microsoft’s $69 billion bid to acquire video game giant Activision Blizzard.