The Competition and Markets Authority (CMA), the UK’s competition regulator, believes Microsoft’s planned $68.7 billion acquisition of Activision Blizzard could harm its rivals.
The CMA says the proposed deal raises a number of competition concerns, and suggests it could warrant further investigation based on the evidence it has already received.
“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,” wrote the CMA.
The regulator said it has also received evidence relating to the potential impact of combining Activision Blizzard with Microsoft’s broader ecosystem, which includes its hardware business, cloud platforms, and PC operating system — all of which it believes could be “important” to its success in the cloud gaming space.
“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,” it added.
A harmful proposition?
The CMA believes the concerns outlined above warrant an in-depth “Phase 2” investigation into the deal. Microsoft and Activision Blizzard now have five days to submit proposals addressing those concerns before the deal is referred for a Phase 2 investigation, which allows an independent panel of experts to “probe in more depth the risks identified at Phase 1.”
“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,” added Sorcha O’Carroll, senior director of mergers at the CMA.
“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.”
Microsoft, for its part, says it’s ready to work with the CMA to address its concerns and ensure the deal moves forward.
“We’re ready to work with the CMA on next steps and address any of its concerns. 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,” said Brad Smith, Microsoft president and vice chair, in a statement. “We want people to have more access to games, not less.”