The United Kingdom’s competition regulator body CMA (The Competition and Markets Authority) voiced some serious concerns over Microsoft’s intent to purchase Activision Blizzard for a hefty $68.7 billion. CMA believes Microsoft owning Activision Blizzard can significantly lessen the competition across gaming consoles, multi-game subscription services, and cloud gaming services.
CMA’s official press release underlines that Microsoft is one of the big three in the video game console space already (the other two are obviously Sony and Nintendo), and the console market itself has seen very few new entries in the last 20 years. The regulatory body then points out the fact that Activision Blizzard is one of the leading game makers and publishers worldwide, and houses genre-leading series such as Call of Duty and World of Warcraft.
CMA’s concerns over the potential acquisition don’t end here, though. The UK regulatory body mentions that Microsoft owns a leading game console in Xbox, a leading operating system in Windows OS, and a leading cloud platform in Azure. CMA believes combining Activision Blizzard’s wide-ranged products with Microsoft’s ecosystem can potentially impact the competition negatively.
The regulator fears Microsoft may leverage Activision Blizzard games together with its strength in console, PC, and cloud and harm the market and competition across multiple areas.
The competition regulator believes all of these concerns warrant an in-depth Phase 2 investigation. It has given Microsoft and Activision Blizzard five days to submit proposals to address the concerns.
Sorcha O’Carroll, Senior Director of Mergers at the CMA commented about the potential acquisition with the following words:
“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.”
Back in August, Saudi Arabia approved Microsoft’s acquisition of Activision Blizzard, however, if CMA doesn’t approve the acquisition, the deal may not go through at all. While the potential acquisition is being examined thoroughly by a number of regulators across the world, the ones in the US (FTC), Europe, and the UK have the strongest voices. CMA’s decision is, therefore, crucial for Microsoft’s plans for the near future.
Among the global companies which Microsoft is strongly competing with, only Sony voiced a strong opinion against Microsoft’s intention to purchase Activision Blizzard.
Activision Blizzard says the deal will most likely close in the FY ending June 2023
Following CMA’s press release, the CEO of Activision Blizzard Bobby Kotick sent a letter to all employees. “This is a long process. With the number of government approvals required, we still believe the deal is most likely to close in Microsoft’s fiscal year ending June of next year,” said Kotick then added, “We are fortunate to have already received approvals from a couple of countries, and the process with all of the regulators is generally moving along as we expected.”
Kotick acknowledged that the deal’s review has entered Phase 2, and said the company is fully cooperating with the regulators, as well as every other organization to get the approvals necessary to make the deal go forward.
The CEO also said he’ll initiate town halls to keep everyone informed about the company’s future.