UK competition regulator red flags Microsoft Activision deal, to do in-depth study

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Britain’s antitrust regulator said Microsoft Corp’s $69 billion acquisition of “Call of Duty” maker Activision Blizzard could harm competition in gaming consoles, subscription services and cloud gaming, which needs to be investigated in depth. The deal, the largest ever in the gaming industry was announced in January. 

“The Competition and Markets Authority (CMA) is concerned 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),” said the competition regulator in a press release. 

The competition watchdog said the deal could damage the industry if Microsoft refused to give competitors access to Activision’s best-selling games such as Call of Duty and World of Warcraft. Microsoft, with Xbox, and its rivals Sony and Nintendo have led the console market for 20 years, with limited entries from new rivals, the CMA said.

“Microsoft already has a leading gaming console (Xbox), a leading cloud platform (Azure), and the leading PC operating system (Windows OS), all of which could be important to its success in cloud gaming.”

After an initial research phase, the CMA said it will move to a Phase 2 investigation if Microsoft and Activision aren’t able to answer its concerns within five working days. A Phase 2 investigation will see an independent panel examine Microsoft’s deal in more detail and whether control over games like Call of Duty and World of Warcraft will harm rivals.

In response, Microsoft Gaming CEO and head of Xbox Phil Spencer wrote a blog post to provide Microsoft’s position.”In doing so, we will pursue a principled path. We’ve heard that this deal might take franchises like Call of Duty away from the places where people currently play them.  That’s why, as we’ve said before, we are committed to making the same version of Call of Duty available on PlayStation on the same day the game launches elsewhere,” read the blog post by Phil Spencer. 

Spencer compared the Activision Blizzard deal to Microsoft’s $2.5 billion acquisition of Minecraft. “We know players benefit from this approach because we’ve done it with Minecraft, which continues to be available on multiple platforms and has expanded to even more since Mojang joined Microsoft in 2014,” said Spencer.

In response to CMA, Microsoft president and vice chair Brad Smith issued the following statement:

“We’re ready to work with the CMA on next steps and address any of its concerns. Sony, as the industry leader, says it is worried about Call of Duty, but we’ve said we are committed to making the same game available on the same day on both Xbox and PlayStation. We want people to have more access to games, not less.”