The Microsoft Acquisition Of Activision Blizzard Gets Major UK Pushback (original) (raw)

from the regulators-mount-up! dept

Over a year ago, as the world was still largely reeling from the COVID-19 pandemic, we wrote about the trend beginning to form for consolidation in the video game industry. Industry consolidation is very typical in times of economic strife and it appears the video game industry is not immune to it. We heard about several studio and publisher acquisitions, not the least of which was Microsoft’s announced acquisition of Activision Blizzard for a whopping $68 billion. Almost immediately after that announcement was made, the public began making noise about what this would mean for several game franchises if they went exclusive to Xbox/PC, especially Call of Duty.

Once Microsoft responded with several vague and wishy-washy statements responding to that, the regulators jumped in and started expressing their own concerns. The FTC has filed suit to block the merger. The EU regulators are making similar noises over competition concerns. And then there’s the UK, where the Competition and Markets Authority (CMA) had already expressed concern before indicating that they were going to do phase 2 discovery on the acquisition. That has been completed and, hoo-boy, the CMA certainly has some ideas for how to alleviate its concerns.

The country’s Competition and Markets Authority announced provisional findings on Wednesday that the deal would threaten competition in the gaming market, and even suggested that in order to get the merger approved, Activision Blizzard would need to sell off the Call of Duty part of its business first.

“Xbox and PlayStation compete closely with each other at present and access to the most important content, like CoD, is an important part of that competition,” the CMA wrote in a press release. “Reducing this competition between Microsoft and Sony could result in all gamers seeing higher prices, reduced range, lower quality, and worse service in gaming consoles over time.”

It obviously goes into far more depth than just that, though. The CMA even offered other potentially remedies, which we’ll get into in a moment. The analysis and the concerns that come from it from the CMA are clear and detailed. Microsoft is going to be financially incentivized to take more AAA titles exclusive to its platforms, it has already waffled on the language in its public promises to not do that, and doing so would deprive the market of competition in the marketplace and raise costs for consumers.

Microsoft has said repeatedly that it would not change the status of Call of Duty on PlayStation after the sale, going so far as to suggest signing a 10-year agreement to that effect. That agreement would reportedly also include the option for Sony to put Call of Duty on its own subscription service, PS Plus. But the CMA isn’t very enthusiastic about these possibilities, which would require “monitoring and enforcement.” Instead, it proposes “structural remedies” that deal with potentially anti-competitive mergers at the source.

And that’s where the CMA offers up four possibilities to remedy its concerns. As you will see, Microsoft isn’t going to like any of them.

Divestiture of the business associated with Call of Duty

Divestiture of the Activision segment of Activision Blizzard, Inc.

Divestiture of the Activision segment and the Blizzard segment

Prohibition of the merger

Now, Microsoft has a chance to respond to these and work with the CMA to find alternative remedies. But the UK generally has far more teeth in the mouths of its regulators compared with America. The EU too tends to be more regulator-heavy. But even here in the States, the FTC is suing to block the acquisition.

None of this sounds particularly promising for Microsoft. And, frankly, it’s not hard to see the regulators’ point on all of this. Microsoft’s messaging has sucked, this acquisition is enormous, and the only thing to placate anyone worried about this stifling competition in the marketplace would be taking Microsoft’s latest promises at their word.

Filed Under: antitrust, competition, uk, video games
Companies: activision blizzard, microsoft