UK regulator “concerned” over Microsoft-Activision deal, may launch second probe

The UK’s competition watchdog, the Competition and Markets Authority, (CMA) has expressed concerns over Microsoft’s acquisition of Activision Blizzard following its investigation into the $68.7 billion deal. [updated]Update: In a new blog post, Microsoft Gaming CEO Phil Spencer has said that Microsoft will “continue to engage with regulators with a spirit of transparency and openness as they review this acquisition. “We respect and welcome the hard questions that are being asked. The gaming industry today is robust and dynamic. Industry leaders, including Tencent and Sony, continue to expand their deep and extensive libraries of games as well as other entertainment brands and franchises, which are enjoyed by players everywhere. We believe that a thorough review will show that the combination of Microsoft and Activision Blizzard will benefit the industry and players.”Original Story: In a press release from the CMA, the regulatory body said it is “concerned that Microsoft’s anticipated purchase of Activision Blizzard could substantially lessen competition in gaming consoles, multi-game subscription services, and cloud gaming services.”Microsoft’s acquisition of Activision Blizzard “could leak to competition concerns,” CMA saysThe CMA has concerns that if the acquisition was to go through, “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.” The watchdog also says it has received “evidence about the potential impact” of combining Activision Blizzard with Microsoft’s ecosystem. “Microsoft already has a leading gaming console (Xbox), a leading cloud platform (Azure), and the leading PC operating system (Windows OS), all of which could be important to its success in cloud gaming,” The CMA says. “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.”These concerns apparently warrant “an in-depth Phase 2 investigation.” Both Microsoft and Activision Blizzard now have had five working days to address the CMA’s concerns with the deal. “If suitable proposals are not submitted, the deal will be referred for a Phase 2 investigation, the CMA notes.” A Phase 2 investigation will allow an independent panel of experts to probe the risks of the deal further and evaluate “whether it is more likely than not that a substantial lessening of competition will occur as a result of the merger – a higher threshold than Phase 1.”Sorcha O’Carroll, senior director of mergers at the CMA, said: “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.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 and Activision Blizzard now have five working days to respond to the issues the CMA has raised.



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