Microsoft’s Activision deal could harm competition, UK watchdog says

The UK’s Competition and Market Authority (CMA) stated on Thursday that Microsoft’s proposed $68.7 billion Activision Blizzard acquisition could significantly harm competition, signaling its intention to launch an in-depth investigation into the deal. 

Microsoft first announced the deal back in January, and CMA launched its antitrust investigation in early July. The watchdog just announced its findings of the investigation’s first phase yesterday, expressing their concerns that the acquisition ‘could substantially lessen competition in gaming consoles, multi-game subscription services, and cloud gaming services.’

‘’Activision Blizzard has some of the world’s best-selling and most recognisable gaming franchises, such as Call of Duty and World of Warcraft. 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 a statement. 

The watchdog also said that they received evidence about the possible consequences of the merger between Activision and Microsoft, which already has an important position in cloud gaming thanks to its Xbox consoles, cloud service Azure and operating system Windows. 

‘’The CMA is concerned that Microsoft could leverage Activision Blizzard’s games together with Microsoft’s strength across console, cloud, and PC operating systems to damage competition in the nascent market for cloud gaming services,’’ the watchdog said. 

CMA requires the companies to submit their proposals to address the concerns within 5 working days. If they don’t, the watchdog said it’ll move to the Phase 2 of the investigation to analyse the merger more deeply to determine whether it’s against competition. 

Microsoft said that it’s willing to collaborate with the UK watchdog to address their concerns. 

‘’We’re ready to work with the CMA on next steps and address any of its concerns,’’ Microsoft’s President and Vice Chair Brad Smith said. ‘’Sony, as the industry leader, says it is worried about Call of Duty, but we’ve said we are committed to making the same game available on the same day on both Xbox and PlayStation. We want people to have more access to games, not less,’’ he added. 

Activision Blizzard’s Chief Executive Officer Bobby Kotick also shared an open letter to employees yesterday, saying that while the merger deal will be a long process, they still expect it to be closed Microsoft’s fiscal year which will end in June 2023. 

‘’This week we heard from the United Kingdom, where we have more employees than anywhere except North America,’’ Kotick added. ‘’We have entered the second phase of our review there, and we will continue to fully cooperate with the regulators there, and everywhere approvals are required.’’

Microsoft’s largest acquisition is also facing an antitrust investigation by the US Federal Trade Commission (FTC), which is expected to reveal its decision soon. Meanwhile, Saudi Arabia recently became the first country to approve the deal.