Microsoft acquisition of Activision Blizzard raises concerns over competition in UK

Concerns have been raised over Microsoft’s acquisition of Activision Blizzard by the UK Competition and Markets Authority (CMA).

The CMA opened a Phase 1 inquiry into the merger last July, looking into possible effects on the wider gaming industry, and just released a summary of its phase 1 decision, which explores the impact Microsoft’s acquisition of Activision Blizzard may have on the greater games console and games streaming market.

“Following our Phase 1 investigation, we are concerned that Microsoft could use its control over popular games like Call of Duty and World of Warcraft post-merger to harm rivals, including recent and future rivals in multi-game subscription services and cloud gaming,” says Sorcha O’Carroll, Senior Director of Mergers at the CMA.

A particular focus on the CMA’s summary and accompanying press release is on the effect that the Activision Blizzard acquisition would have on subscription services and cloud gaming, and how Microsoft could leverage access to ActiBlizz franchises and content to hurt rivals in and outside the UK. The CMA also noted Microsoft’s ecosystem advantages with control of Xbox, the leading PC operating system (Windows), and the cloud infrastructure provided by Azure in the cloud gaming space.

Activision Blizzard UK

Relevant to these competition concerns of course is the recent announcement by Phil Spencer that should the MS-ActiBlizz merger go through, they plan to put Blizzard’s leading franchises such as Call of Duty, Overwatch, and Diablo to Game Pass, while also reiterating that Microsoft has no plans to make these titles exclusive to PC or Xbox.

“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,” writes Spencer in a blog post addressing the acquisition. “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. We will continue to enable people to play with each other across platforms and across devices…As we extend our gaming storefront across new devices and platforms, we will make sure that we do so in a manner that protects the ability of developers to choose how to distribute their games.”

The CMA has given Microsoft and Activision Blizzard 5 working days to submit proposals in response to the CMA’s competition concerns. If suitable proposals are not submitted, the deal will be referred for a Phase 2 investigation, which will involve an independent panel of experts to examine the deal in depth, with input from third-parties and a review of (Microsoft & Activision Blizzard) internal documents.

While not entirely unexpected, the move does throw a regulatory hurdle in the path of Microsoft’s latest gaming acquisition, which is facing scrutiny from a number of regulators internationally.