Microsoft, Activision Blizzard acquisition deal ‘could substantially lessen competition,’ UK regulator says

The United Kingdom’s Competition and Markets Authority (CMA) released its initial comments on Microsoft and Activision Blizzard’s ongoing $68.7 billion acquisition on Thursday. The watchdog said it is “concerned” that the blockbuster deal “could substantially lessen competition” in the video game industry.

CMA noted that Microsoft is one of the leading companies in the gaming console market. But the regulator added that the Xbox parent company also owns a leading cloud platform in Azure and the leading PC operating system with Windows.

It also appears that one of CMA’s biggest concerns about the mega-deal is similar to what worries most PlayStation fans. “The CMA is concerned that if Microsoft buys Activision Blizzard it could harm rivals, including recent and future entrants into gaming, by refusing them access to Activision Blizzard games or providing access on much worse terms,” CMA said in its announcement.

Activision Blizzard publishes some of the biggest game franchises, including “Call of Duty,” “World of Warcraft,” and “Overwatch.” And since the companies announced the acquisition in January, gaming fans have been worried that some Activision Blizzard titles will end up becoming exclusive to Xbox consoles and services.

CMA says Microsoft and Activision Blizzard have five days to submit proposals addressing the regulator’s concerns. If the companies fail to submit or if the proposals will not satisfy the regulator, the transaction will be subjected to a more in-depth Phase 2 investigation.

CMA explained that, in its Phase 2 investigation, an independent panel will further evaluate "whether it is more likely than not that a substantial lessening of competition will occur as a result of the merger." The regulator added that it will conduct a more in-depth review of Microsoft and Activision Blizzard’s internal documents to assess how the companies view competition and the gaming market.

Among Activision Blizzard’s IPs, “Call of Duty” seemed to be the franchise that concerns gamers and Microsoft’s competitors the most. Shortly after the acquisition was announced, Microsoft assured Sony and gaming fans that the first-person shooter series will remain available on PlayStation consoles in the future.

Sony brought up the same matter concerning “Call of Duty” in its response to Brazil’s competition watchdog Administrative Council for Economic Defense's (CADE) public consultation about the $68.7 billion deal. But Microsoft said it will not be profitable for it to make “Call of Duty” exclusive to Xbox consoles.

Photo by Gage Skidmore from Flickr (CC BY-SA 2.0)