Microsoft announced its acquisition of Activision Blizzard in January, reportedly spending an incredible $68.7 billion on the industry-shaking buyout. However, the deal hasn’t evaded regulatory scrutiny, with the FTC investigating the company for insider trading. There were also questions over whether the regulatory agency might block the acquisition under US anti-trust legislation.
American regulators aren’t the only ones raising their eyebrows at Microsoft’s massive Activision Blizzard buyout. The UK’s Competition and Markets Authority recently ruled that the merger may have serious consequences for market competition in the United Kingdom. This may present a severe risk for Microsoft and Activision Blizzard’s deal unless both companies can convince the CMA that these concerns are unfounded.
CMA’s September 1 ruling warned that the merger “may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.” The agency cited concerns that the deal could result in Microsoft “withholding or degrading” Activision Blizzard’s content on non-Microsoft platforms. The agency also warned that Microsoft’s exclusive ownership of Activision Blizzard could give its Cloud Gaming service too much of an advantage over competitors and allow Xbox to shut rivals out of the market.
British regulators also highlighted their concerns over Microsoft’s control over Activision Blizzard franchises like Call of Duty, Candy Crush, and World of Warcraft. The CMA believes that Microsoft could withhold these titles from rival platforms like PlayStation, locking competitors like Sony out of a significant share of the gaming market. This, the CMA ruled, would hinder Sony’s and other companies’ “ability to compete,” which would remove “healthy competition” from the UK gaming market. The CMA came to these conclusions after gathering thousands of internal documents and data from Microsoft and Activision.
The UK regulator will likely require Microsoft and Activision Blizzard to undergo a more in-depth investigation. However, Microsoft and Activision Blizzard can avoid this by presenting the CMA with substantial evidence that the merger will not have a serious impact on competition within the UK gaming market. However, the companies only have until September 8 to make their case.
“We’re ready to work with the CMA on the next steps and address any of its concerns,” said Microsoft president and vice chair Brad Smith. He also stated that Microsoft would work with the CMA to address the agency’s concerns and reaffirmed Microsoft’s commitment to releasing Call of Duty on PlayStation the same day as Xbox. “We want people to have more access to games,” said Smith, “not less.”
Meanwhile, Blizzard’s controversial CEO Bobby Kotick is confident that the merger will continue as planned. The company recently shared a letter to employees where Kotick said he expects the deal to go through before Microsoft’s current fiscal year ends on June 30, 2023. He also noted how the merger has already seen regulatory approval in other countries and that Microsoft’s acquisition is proceeding at the expected rate.
Source: GameIndustry.biz