The UK Competition and Markets Authority (CMA) has previously expressed concern over Microsoft’s plans to Acquire Activision Blizzard last year but he now says the deal could harm UK players. The CMA released interim findings in its investigation into Microsoft’s deal with Activision and found it “could result in higher prices, less choice or less innovation for UK gamers”. The CMA offered possible solutions, including requiring Microsoft to sell Activision Blizzard’s business associated with Call of Duty.
The CMA clarifies that it is primarily concerned with two things: cloud gaming and game exclusivity. “The evidence available to the CMA currently indicates that Microsoft would find it commercially advantageous to make Activision’s games exclusive to its own cloud gaming service (or only available on other services under materially worse terms),” the regulator says. British.
The CMA believes that if Microsoft acquires Activision Blizzard, it would strengthen its strong position in cloud gaming, which the regulator estimates at 60-70% of “global cloud gaming services”.
Microsoft could also weaken competition in games through exclusive Activision games, the CMA warns. “The CMA has tentatively found that weakening competition by restricting other platforms’ access to Activision’s games could significantly reduce competition between Xbox and PlayStation in the UK, in turn harming UK gamers” , says the regulator.
The CMA has now suggested a set of possible solutions Microsoft could take to secure approval for the acquisition of Activision Blizzard in the UK. They include a structural remedy suggestion that involves a partial divestiture of Activision Blizzard in the form of the sale of the Call of Duty business. Other remedies include the sale of the Activision segment or the Activision and Blizzard segments which would include the activities associated with Call of Duty, World of Warcraft, and other games.
None of these remedies are favorable to Microsoft, and the company was likely hoping for behavioral remedies like agreements to ensure Call of Duty and other Activision games are available on competing cloud gaming services and exclusivity limitations for games on consoles. The CMA asserts that “behavioral remedies are less likely to have an effective impact,” and it essentially excludes this pathway in these interim findings unless the regulator was “confident that the remedy was capable of effective implementation.” effective implementation, monitoring and enforcement”.
However, Microsoft still believes behavioral remedies could address the CMA’s concerns. “We are committed to delivering effective and easily enforceable solutions that address CMA’s concerns,” Rima Alaily, Microsoft vice president and assistant general counsel, said in a statement to The edge. “Our long-term commitment to 100% equal access toCall of Duty to Sony, Nintendo, Steam and others preserves the benefits of the agreement for gamers and developers and increases competition in the marketplace.
The CMA’s findings are tentative at this time, but it’s a blow to Microsoft’s plans to acquire Activision Blizzard. The software giant is facing regulatory scrutiny around the world, with the FTC sues to try to block deal at the end of last year. The European Commission has also opened an “in-depth investigation” into the deal with Activision Blizzard. in Novemberand he would have issued a formal warning to Microsoft on the acquisition.
Although the CMA is only a single regulator for the UK, it still strongly influences the way US-based companies operate in the UK and Europe. Meta was forced to sell Giphy following an order from the UK competition watchdog last year. As regulators around the world seek to take tougher stances on Big Tech acquisitions, the CMA’s findings could also influence the reaction of the European Commission.
The CMA is now expecting industry responses by February 22 to its possible remedies, followed by responses to the interim findings by March 1. These will all be considered ahead of the CMA’s release of its final report, which is expected by April 26.
Updated Feb. 8, 8:20 a.m. ET: Article updated with Microsoft’s comment.