Microsoft’s $68.7 billion deal to acquire Activision Blizzard has set off alarm bells from UK regulators and could now face a deeper and longer investigation.
The UK Competition and Markets Authority (CMA) announced it would investigate the deal in July, and the result of that initial investigation was published today. This is not good news for Microsoft, as the CMA concluded that “Microsoft’s early purchase of Activision Blizzard could substantially lessen competition in game consoles, multi-game subscription services, and cloud gaming services (video streaming). games)”.
The CMA points out that Microsoft already has a leading game console (Xbox Series X), a cloud platform (Azure), and a PC operating system (Windows 11). With that in mind, the CMA is concerned that Microsoft could “leverage Activision Blizzard games along with Microsoft’s strength in console, cloud and PC operating systems to harm competition in the nascent market for gaming services in the cloud”.
Microsoft and Activision Blizzard now have five days to submit proposals to the CMA that attempt to address the regulator’s concerns. If they don’t, a “Phase 2” investigation will be triggered, involving an independent panel of experts looking at the deal in more detail before deciding whether it would lead to a substantial 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 that the FTC requested more details earlier this year, and the acquisition looks far from over anytime soon.