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UK Competition Watchdog Opposes Microsoft-Activision Merger

 |  February 8, 2023

The UK’s Competition and Markets Authority (CMA) has found that Microsoft’s proposed acquisition of gaming company Activision Blizzard could harm competition across multiple markets.

The CMA’s provisional conclusions, issued on Wednesday (8 February), found that the deal would likely impact competition in cloud gaming services and the supply of consoles.

The provisional findings come after five months of investigation into the $69 billion deal, announced in January 2022 and cover antitrust concerns regarding the supply of both cloud gaming services and consoles.

The merger has proved controversial, attracting regulatory scrutiny from several other authorities, including in Brussels and Washington.

The CMA is now seeking input from the companies involved, as well as comments from interested parties ahead of its final report on the acquisition, due by 26 April.

Related: UK Expected To Publish Thoughts On Activision/Microsoft Next Week

Following the launch of initial proceedings looking into the deal last July, the CMA in September announced that it would move ahead with a formal investigation into what would be Microsoft’s largest acquisition to date.

The purchase would make the tech giant one of the largest gaming companies by revenue, which prompted concerns from the UK watchdog that control by Microsoft over Activision’s most popular games, such as Call of Duty, could harm rivals and lead to industry dominance.

The CMA said that its investigation indicated that it would benefit Microsoft to make Activision’s games exclusive to, or available at a much higher quality on, its own cloud gaming service.

Given Microsoft’s existing presence in this market, including its ownership of Xbox, Azure and Windows, the regulator concluded that buying an already powerful gaming company would reduce competition, potentially harming UK gamers and impacting the future of the gaming environment.

The UK regulator also found that a small number of high-profile games, including Call of Duty, are key in driving competition between different consoles and that it would likely be to Microsoft’s commercial advantage to make Activision’s games again either only available on its own consoles or available on others, but under materially worse conditions.

The CMA noted that buying game studios and then making their content available only on Microsoft’s own platforms has been a strategy used by the company before in previous purchases.

Given the close competition between Xbox and Sony-owned PlayStation, Microsoft’s ability to gatekeep access to games such as Call of Duty could, the CMA said, lead to higher prices and lower quality for UK gamers over time.