UK's regulator expresses concerns over Microsoft using Activision deal to "harm rivals"

Even if Activision expects its deal with Microsoft to close in June 2023, the two companies are still not free from the scrutiny of different regulatory bodies worldwide. Last week, UK’s antitrust regulator, the Competition and Markets Authority (CMA), expressed its concern over the deal after its Phase 1 investigation, saying, “Microsoft could use its control over popular games like ‘Call of Duty’ and ‘World of Warcraft’ post-merger to harm rivals…”

CMA followed the statement with its intention to give the deal a deeper investigation as it could lead to problems in case Microsoft gets the power to keep Activision’s best-selling games away from its competitors. Recently, Microsoft said that it would keep “Call of Duty” on PlayStation for a number of years even after the deal ends. However, the company still didn’t make clear commitments to letting other subscription services access Activision Blizzard’s games. With this, different analysts highlighted the need for Microsoft to provide assurance to other competitors and put them into writing.

The competition regulator focused on the effects of the acquisition on the console market competition between Microsoft, Sony, and Nintendo. Specifically, the CMA fears the possibility of Sony being refused to get access to new Call of Duty games.

“As the multi-game subscription market is still in its infancy, the effect of the Merger could be to tip or significantly increase concentration in the market in Microsoft’s favour before future rivals have a chance to develop,” CMA said regarding the Xbox Game Pass.

In addition, the UK’s competition watchdog said that the problem that could arise in the market for games consoles is not the only thing to mind, as it also covers “recent and future rivals in multi-game subscription services and cloud gaming.” CMA argued that Microsoft already has a well-established status in cloud gaming due to its subscription service, Xbox, cloud gaming service, Azure cloud platform, and Windows OS. And with Microsoft planning to bring the biggest Activision games on its different platforms via cloud game streaming, these claims from CMA are not far from possible.

The two companies are given until September 8 to address CMA’s concerns, or it will proceed to the second stage of a probe. “If our current concerns are not addressed, we plan to explore this deal in an in-depth phase two investigation to reach a decision that works in the interests of UK gamers and businesses,” said Senior Director of Mergers at CMA Sorcha O’Carroll.

Activision already released a comment about it, and although it didn’t deny CMA’s concern, it recognized the regulator’s view as part of the process.

“This week we heard from the United Kingdom, where we have more employees than anywhere except North America. We have entered the second phase of our review there, and we will continue to fully cooperate with the regulators there, and everywhere approvals are required,” said Activision CEO Bobby Kotick in blog post. “As our industry continues to see numerous companies investing aggressively in gaming, including many of the world’s largest technology and media companies, government regulators are taking appropriate and deliberate steps to better understand our industry and the growing competition from around the world.”