What about Microsoft’s purchase of Activision Blizzard? Well, the “Competition and Markets Authority” (CMA for short) announced at the turn of the month that they did not want to wave the deal through yet. On the contrary, there could be a second phase of investigation.
as Microsoft announced the acquisition of Activision Blizzard in January 2022, it was clear: This is not a deal that is just nodded off by all the authorities. After all, the fourth strongest company in the games industry (when it comes to pure sales) swallows up the company in 7th place (source). And it’s about a sum of 70 billion (!) US dollars. If the purchase goes through, it will only be because there are two larger industrial groups, Sony and above all Tencent, and because the market, despite the numerous takeovers in recent years, is still diverse enough to prevent Microsoft from monopolizing.
CMA wants to take a closer look
A recent announcement by the Competition and Markets Authority (CMA for short, via Gamesindustry.biz). The agency raised concerns after the first phase of its investigation that Microsoft’s record-breaking acquisition of Activision Blizzard could hurt competition in the UK.
In the course of the investigation, the UK regulator collected thousands of internal documents and data from both parties to understand their businesses. In the end, it was concluded that the completion of the acquisition could affect competition in two ways:
- The deal could result in Microsoft taking Activision Blizzard’s content from other consoles or subscription services”restrains or worsens“.
- Microsoft could leverage its broader ecosystem along with Activision’s catalog to “Raise barriers to entry and shut out competitors in cloud gaming services“.
The agency also emphasizes that there could be a risk that Microsoft’s control of franchises such as Call of Duty, World of Warcraft and Candy Crush “harms consumers by hampering the competitiveness of Sony – Microsoft’s closest gaming competitor“A second investigation phase is therefore now being planned. This can only be prevented if both Microsoft and Activision Blizzard “offer acceptable commitments to address these competition concerns“.
How are Microsoft and Activision responding?
Following the CMA’s announcement, Activision CEO Bobby Kotick sent out a letter to all employees: The acquisition is still expected to be completed by the end of Microsoft’s fiscal year (June 30, 2023). Some countries have already approved the deal. With other regulators, the process would generally go as expected. They want to continue to work fully with the UK regulators,”wherever permits are required.“