Today it became known that the British regulator (CMA) made a preliminary decision to refuse to approve the deal between Microsoft and Activision Blizzard (we wrote about this on the Newxboxone website here). Some time later, the UK antitrust regulator issued a press release, which made it clearer what concerns there were about the deal. Here are some key details from that press release.
In the document, CMA representatives note that during the investigation:
The positions of Microsoft and Activision executives were heard. Specialists analyzed more than 3 million internal documents from companies. A survey was conducted among gamers in the UK. Opinions were collected from other industry representatives.
As a result, the CMA has come to the conclusion (press release) that:
Microsoft’s proposed acquisition of Activision could lead to higher prices, less choice or less innovation for UK gamers.The deal will reduce competition in the cloud gaming segment. Quote from the document: “The ability to offer popular games will be important for cloud gaming providers to attract users as the market continues to grow and evolve. Evidence available to the CMA currently indicates that Microsoft would find it commercially viable to make Activision games exclusive to its own cloud gaming service. Microsoft already accounts for about 60-70% of global cloud gaming services, and has other important advantages in cloud gaming through its ownership of Xbox, the leading PC operating system (Windows), and global cloud computing infrastructure (Azure and Xbox Cloud Gaming). The CMA has tentatively determined that the acquisition of one of the world’s most important game publishers will bolster this strong position and substantially reduce the competition Microsoft would otherwise face in the UK cloud gaming market.”The deal will reduce competition between Xbox and Playstation. Quote from the document: “The CMA has tentatively determined that a small number of key games, including Call of Duty, Activision’s flagship game, play an important role in driving competition between consoles. Evidence available to the CMA, including how Microsoft measures customer value in the normal course of business, currently indicates that Microsoft would find it commercially viable to make Activision games exclusive to its consoles (or available also on Playstation with restrictions). or aggravated). The CMA’s preliminary findings note that this strategy of buying game studios and making their content exclusive to Microsoft platforms has been used by Microsoft since several previous game studio acquisitions. The CMA has tentatively determined that reducing competition by restricting other platforms from accessing Activision games could significantly reduce competition between Xbox and Playstation in the UK, which in turn would be detrimental to UK gamers.”
The press release notes that “the CMA welcomes stakeholder responses to its preliminary findings by March 1, 2023,” plus suggestions from Microsoft on possible remedies. The CMA plans to make a final decision by April 26.
