Microsoft's Activision Blizzard Deal Deemed Bad for Competition by UK
Microsoft's $68.7 billion deal to acquire Activision Blizzard has raised alarm bells with UK regulators and could now face a longer, more in-depth investigation.
The UK Competition and Markets Authority (CMA) announced it would be investigating the deal back in July, with the outcome of that initial investigation having been published today(Opens in a new window). It's not good news for Microsoft, with the CMA concluding that, "Microsoft’s anticipated purchase of Activision Blizzard could substantially lessen competition in gaming consoles, multi-game subscription services, and cloud gaming services (game streaming)."
The CMA points to Microsoft already having a leading games console (Xbox Series X), cloud platform (Azure), and PC operating system (Windows 11). With that in mind, the CMA is worried Microsoft could, "leverage Activision Blizzard’s games together with Microsoft’s strength across console, cloud, and PC operating systems to damage competition in the nascent market for cloud gaming services."
Microsoft and Activision Blizzard now have five days to submit proposals to the CMA attempting to address the regulator's concerns. If they don't, then a "Phase 2" investigation will be triggered, which involves an independent panels of experts who look at the deal in more detail before deciding if it would lead to a substantially lessening of competition. It requires more engagement with third parties, and more internal documents from the companies involved.
If the Phase 2 investigation goes ahead, it would result in a significant delay before the deal could be concluded. Add to that the FTC asking for more detail earlier this year, and the acquisition is looking far from certain to conclude any time soon.
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