UK Regulator Raises Competition Concerns Over Microsoft's $69 Billion Acquisition of Activision

As the British competition regulator states, Microsoft's acquisition of Activision Blizzard for $69 billion could impact competition in the UK gaming market, and the agency could move to block the acquisition if it is deemed detrimental to competition.

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There was a preliminary decision published on Wednesday by the Competition and Markets Authority regarding the proposed takeover, in which it stated that the deal raises competition concerns and may lead to higher prices, fewer options, and a lack of innovation as a result.

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The CMA stated in a notice of possible remedies that it may require Microsoft to:

• Selling the popular Call of Duty franchise that is a part of the company's business
• Divesting Activision Blizzard's Activision segment would be a good move
• Divestiture of Activision and Blizzard
• Deal to be terminated

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Activision Blizzard and Microsoft have until Feb. 22 to respond to the request. It is expected that the CMA will issue a final decision on April 26. After the deal was announced on September 1, the regulator began an in-depth investigation into the deal.

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As the CMA points out, the Activision deal could enhance Microsoft's position in the cloud gaming market, as it will add Call of Duty and other lucrative titles to Xbox Game Pass, Microsoft's cloud-based platform for cloud-based gaming.

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Despite the fact that cloud gaming is still in its infancy, and it's not yet a mainstream technology, gamers can still play their favorite games over the internet on devices other than consoles.

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As part of the deal, Microsoft would also be able to boost its console business, the CMA said, adding that the company would find it “commercially beneficial” to make Activision games exclusively available for Xbox hardware, or to make them available on PlayStation hardware, “under materially worse conditions.”

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According to the watchdog, these moves "could significantly reduce the competition between Xbox and PlayStation in the UK, which, in turn, would harm UK gamers," the watchdog said.

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Following the CMA announcement on Wednesday, Activision Blizzard's shares were down by 2% on the day. The share price of Microsoft, on the other hand, was trading 2% higher as a result of an announcement that the tech giant announced advancements in artificial intelligence.

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In an emailed statement to Trade Algo, Rima Alaily, Microsoft's vice president and deputy general counsel, informed us that Microsoft is committed to offering effective and easily enforceable solutions that address the CMA's concerns.

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For the next 10 years, Microsoft has committed to releasing its new Call of Duty games on Sony's PlayStation and Nintendo's Switch gaming platforms and has committed to doing so.

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It has been confirmed by an Activision Blizzard spokesperson that Activision Blizzard hopes to "help the CMA better understand our industry so they can achieve their stated mandate to promote an environment where people can be confident that they are getting great choices and fair deals when buying video games.". On Wednesday, Bobby Kotick, the CEO of Activision Blizzard, sent an internal memo to the company's employees declaring that the company was "confident that the law - and the facts - are on our side.". Kotick added, "In this case, our combined companies will give more competition to companies such as Sony, Tencent, NetEase, Apple, Amazon, and Facebook.". “ As a result of this merger, we feel we have additional resources needed to compete with companies such as these."

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Microsoft Activision's deal is also facing scrutiny in the United States as well as in the European Union. Currently, the Federal Trade Commission is seeking to block the purchase on the basis of antitrust concerns, as well as the European Commission is also investigating the transaction on the basis of antitrust concerns. The European Commission, which is the executive arm of the EU, recently sent a document known as a statement of objections outlining its concerns about the proposed deal, according to a report by Trade Algo.