With Microsoft announcing plans to acquire Activision Blizzard for $68.7 billion back in January, an investigation launched by the UK’s Competition and Markets Authority (CMA) has raised possible concerns surrounding the deal, leading to an “in-depth probe” to “fully assess” the issues that could arise, and “suitable proposals” to address those issues.
“The Competition and Markets Authority is concerned that Microsoft’s anticipated purchase of Activision Blizzard could substantially lessen competition in gaming consoles, multi-game subscription services, and cloud gaming services (game streaming),” the body stated in a press release, adding that the CMA’s concerns pertain to possible harm to rivals, “including recent and future entrants into gaming, by refusing them access to Activision Blizzard games or providing access on much worse terms”.
The press release adds: “The CMA has also received evidence about the potential impact of combining Activision Blizzard with Microsoft’s broader ecosystem. Microsoft already has a leading gaming console (Xbox), a leading cloud platform (Azure), and the leading PC operating system (Windows OS), all of which could be important to its success in cloud gaming. 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.”
Such concerns from the CMA mean that a Phase 2 investigation could be carried out, giving Microsoft and Activision Blizzard have five working days to submit proposals to address said concerns. Should the proposals fail to be submitted, the deal will be referred for a Phase 2 investigation, in which an independent panel of experts will look into the risks identified during the CMA’s Phase 1 results.
“Following our Phase 1 investigation, we are concerned that Microsoft could use its control over popular games like Call of Duty and World of Warcraft post-merger to harm rivals, including recent and future rivals in multi-game subscription services and cloud gaming,” said Sorcha O’Carroll, CMA Senior Director of Mergers. “If our current concerns are not addressed, we plan to explore this deal in an in-depth Phase 2 investigation to reach a decision that works in the interests of UK gamers and businesses”.