The UK’s Competition and Markets Authority (CMA) has ruled that Microsoft’s planned $68.7 acquisition of Activision Blizzard “may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.” In other words, the British government thinks that the deal might be in breach of laws that ensure fair competition among businesses.
This decision marks the end of Phase 1 of the CMA’s investigation into the deal. The ruling means that, unless Microsoft and Activision Blizzard formally address the CMA’s concerns within 5 working days, the investigation will move to Phase 2, which will be much more in-depth and will require much more cooperation from both companies.
Investigations of this kind are perfectly normal practice where big corporate takeovers are concerned, and the purpose of them is to protect us, the consumers, by ensuring that companies are always operating in competitive markets (i.e. markets where they have to keep prices low and quality high).
The CMA’s two main concerns are that Microsoft could, in theory, withhold Activision Blizzard content — particularly that belonging to the Call of Duty brand — from competing consoles and services, most notably Sony’s PlayStation, and that the merger could make it much harder for rivals to compete in the emerging cloud gaming market. These concerns echo those expressed by Sony in response to inquiries made by the CMA’s Brazilian counterpart a month ago.
Microsoft has insisted that Call of Duty will remain multi-platform following the merger. Still, the CMA, and other regulators around the world, are going to need stronger assurances than that before the deal is allowed to go through.
