Topline
The U.K.’s competition watchdog will conduct an in-depth probe into Microsoft’s $68.7 billion deal to acquire video game publisher Activision Blizzard, the agency announced on Thursday while raising concerns about the impact of the acquisition on the console gaming and video game subscription market.
Microsoft announced a nearly $70 billion dollar deal to buy Call Of Duty-maker Activision.
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Key Facts
In a press release, the Competition and Markets Authority (CMA) said it is concerned that Microsoft’s acquisition of Activision Blizzard could “harm rivals, including recent and future entrants into gaming,” by refusing them access to the publisher’s popular games or only allowing access under unfavorable terms.
The CMA said it has also “received evidence” that the integration of Activision into Microsoft’s ecosystem could damage competition in the emerging cloud gaming market.
The CMA’s statement also highlights concerns about the inclusion of Activision’s popular games like Call of Duty into Microsoft’s Xbox Game Pass subscription which could potentially hurt competitors in the growing market.
The CMA has ordered Microsoft and Activision to respond to its concerns within the next five working days.
If the response from the companies does not adequately alleviate the agency’s concerns, it will order a more thorough “Phase 2” probe into the deal by an independent panel of experts.
Forbes has reached out to Microsoft for a comment.
What To Watch For
Apart from the CMA, the deal is also being examined by the European Union’s competition authorities and the Federal Trade Commission in the U.S. In July, Bloomberg reported that the FTC is probing the potential labor impact of the acquisition. Activision’s alleged toxic workplace culture has been under the scanner for several years now and some studios under its umbrella have moved to unionize. Antitrust authorities at the European Commission—the EU’s executive body—are also probing the impact of the deal, according to a report by Politico. EU officials have reportedly distributed questionnaires to Microsoft’s competitors asking them about the deal.
Key Background
Microsoft announced its plan to acquire Activision for nearly $69 billion back in January, making it the largest deal in the history of the video games business. While announcing the deal, Microsoft said it would allow it to grow its gaming business across the PC, Console, Mobile and Cloud markets and “provide building blocks for the metaverse.” A few days later, Xbox chief Phil Spencer announced on Twitter that Activision’s popular first-person shooter franchise Call of Duty will continue to appear on the rival Sony PlayStation platform and any existing deals between Activision and Sony will be honored. Despite this, government filings in Brazil showed Sony remains concerned about the impact of the deal and told Brazilian regulators that Call of Duty has no rival in the gaming business and is popular enough to influence consumers’ decision on which console they should buy. Microsoft then reacted to Sony’s concerns by accusing the company of paying developers to block games from appearing on its Game Pass subscription service.
Further Reading
CMA recommends second phase of Microsoft Activision investigation (GamesIndustry.Biz)
UK’s competition regulator to undertake in-depth investigation of Microsoft-Activision deal (Eurogamer)
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