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The CMA may launch an in-depth investigation as it is concerned Microsoft could restrict access to Activision games.
The UK’s competition watchdog has said that the proposed acquisition of Activision Blizzard by Microsoft could “harm rivals” and “substantially lessen competition” in the gaming sector.
Microsoft shocked the global gaming world in January when it announced plans to snap up video game publisher Activision for a whopping $68.7bn – the biggest gaming acquisition ever.
If it sees the light of day, a Microsoft-Activision deal will make the software giant the world’s third-largest gaming company by revenue, behind Tencent and Sony.
However, soon after Microsoft’s announcement, regulators began to raise eyebrows over the mammoth acquisition.
The UK’s Competition and Markets Authority (CMA) first opened an investigation into the deal in July to consider whether it raised competition concerns “for example, through higher prices, lower quality or reduced choice”.
After completing the first phase of its inquiry, the CMA released a statement today (1 September) saying that it is concerned the deal could harm rivals, including smaller gaming companies, by “refusing them access to Activision games or providing access on much worse terms”.
The watchdog said it has also received evidence about the potential impact of combining Activision with Microsoft’s broader ecosystem. This includes a leading gaming console, Xbox, a leading cloud platform, Azure, and the world’s most popular PC 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 statement reads.
Microsoft defended the deal in a blogpost today, arguing that it will pursue a “principled path” in a move that will “benefit the industry and players”.
“We’ve heard that this deal might take franchises like Call of Duty away from the places where people currently play them,” said Microsoft Gaming CEO Phil Spencer.
“That’s why, as we’ve said before, we are committed to making the same version of Call of Duty available on PlayStation on the same day the game launches elsewhere.”
Spencer made a comparison with Microsoft’s $2.5bn acquisition of Minecraft. “We know players benefit from this approach because we’ve done it with Minecraft, which continues to be available on multiple platforms and has expanded to even more since Mojang joined Microsoft.”
The CMA has given Microsoft and Activision Blizzard five working days to submit proposals that address its concerns.
“If our current concerns are not addressed, we plan to explore this deal in an in-depth phase two investigation to reach a decision that works in the interests of UK gamers and businesses,” said Sorcha O’Carroll, the CMA’s senior director of mergers.
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