Analysts speculate Xbox Activision deal to conclude following UK’s antitrust warning

The same analysts suggest the UK knows it has a losing legal argument.


Image via Activision Blizzard

Wedbush Securities analysts Michael Pachter and Nick McKay speculate that Microsoft’s acquisition of Activision Blizzard is close to completion following this week’s antitrust warning from the UK’s Competition and Marketing Authority.

As originally reported by VGC, after a five-month investigation, the UK’s Competition and Marketing Authority (CMA) revealed this Wednesday that it believed the Xbox Activision deal would “result in higher prices, fewer choices, or less innovation for UK gamers.” Following this, the Wedbush Securities analysts suggested that the deal would complete by mid-May, given that this is the last major authority to give its response.

Related: FTC stepping in to review Xbox’s Activision Blizzard acquisition

No consumer wants higher prices in a cost of living crisis, but the CMA’s argument has been seen as a losing legal argument for more than just this obvious fact. The CMA outlined some remedies to this, including dividing the part of Activision Blizzard that deals with Call of Duty and forcing the company to allow the series to appear on other cloud streaming platforms. However, these are comparatively weak to the lawsuit the FDA plans to file against the merger and the charge sheet the EU regulator issued Microsoft with just last week.

Pachter and McKay have suggested that the EU, US, and UK regulators are now in a game of one-upmanship. They explain that they believe the FTC figured out it would have a losing legal argument late last year, which is why it’s rushing to file a lawsuit. The UK body has now stepped ahead of the FTC by offering its objections and potential remedies to be seen as the first regulator to tackle the colossal businesses head-on. The FTC has yet to offer potential remedies.

It’s this rush from the CMA that has led to speculation that the Xbox Activision deal is close to completion. There wouldn’t be a need to get objections and suggestions for remedies out so fast if the deal’s completion was a year or two away. The Wedbush Securities analysts added that they believe Microsoft will agree to all the behavioral remedies offered by the CMA aside from making Call of Duty available on competitor streaming services. This offers a sticking point for the EU and US regulators to use to extract their own concessions, meaning Microsoft will have to bend just a bit more before this deal goes through.

The reason that regulators are so keen to see Call of Duty on other cloud gaming services is that the franchise has a massive player base that’s currently a captive market in the Xbox and Activision Blizzard ecosystems. However, these companies don’t want to concede and put Call of Duty out there because it means they won’t be the sole earners when it comes to Call of Duty cloud gaming. With layoffs hitting so many businesses this year, including Microsoft last month, it’s likely that Microsoft will do anything to avoid losing out on any profit Call of Duty makes.