Microsoft rejects UK watchdog's COD divestiture suggestion to pass Activision deal

Microsoft made it clear that it has no intention of selling off the Call of Duty business of Activision just to gain the approval of Britain’s Competition and Markets Authority (CMA).

Microsoft defended its proposed $69 billion Activision deal before the European Union regulators in Brussels this Tuesday. After the closed-door hearing, company president Brad Smith entertained the media and discussed tons of significant matters related to the deal. One of the things addressed by Microsoft is the CMA’s suggestion for structural remedies, including the divestiture or sell-off of some of Activion’s segments that cover “business associated with Call of Duty and World of Warcraft, among other titles. Smith, however, made a firm statement turning down the “suggestion.”

Particularly, Smith said that it is not “feasible or realistic to think that one game or one slice of this company can be carved out and separated from the rest.” Smith continued by returning the favor to the antitrust regulators, saying they also have a choice: whether to block the deal completely or approve it to “let the future go forward with behavioral guardrails and remedies and bring this title to 150 million more people.”

Despite this, Smith stressed that Microsoft is using all ways to resolve concerns and provide regulators and competitors solutions. In particular, the executive mentioned making these remedies possible through “contracts, like we did with Nintendo this morning, or whether it’s by regulatory undertakings, as we’ve consistently been open to addressing.”

Smith pertained to the company’s recent announcements, including signing a COD contract with Nintendo alongside “a 10 year agreement with NVIDIA that will allow GeForce NOW players to stream Xbox PC games as well as Activision Blizzard PC titles, including COD, following the acquisition.”

The UK watchdog will conclude its investigation on April 26, but a hearing in London is expected later this month, where potential remedies could be discussed.

It can be recalled that CMA first expressed its concerns over the deal in September last year, saying that “Microsoft could use its control over popular games like ‘Call of Duty’ and ‘World of Warcraft’ post-merger to harm rivals.” Last February, the watchdog released its disapproving provisional findings over the merger. The CMA, however, received criticism from supporters of the deal, including Lulu Cheng Meservey, EVP at Activision Blizzard. In a series of tweets, Meservey noted how the findings only focused on Sony.

“The CMA is concerned the deal could ‘impact rival console gaming platforms,’ explained Meservey. “But it’s really just about one platform: Sony. Nowhere does CMA even mention Nintendo, which has already accepted Microsoft’s offer to guarantee COD access for 10 yrs— bringing games to MORE consoles.”

Source: Bloomberg