In January 2022 Microsoft announced that it was planning to purchase Activision Blizzard for $68.7 billion dollars.
The deal has been under review by regulators since then, and recently the British Competition and Markets Authority (CMA) expressed concern that the deal could substantially lessen competition in gaming consoles, multi-game subscription services, and cloud gaming services (game streaming).
The authority expressed concern that Microsoft would use Blizzard’s collection of games to boost their streaming game service and corner the streaming game market.
The CMA felt that these concerns warranted an in-depth Phase 2 investigation, but gave Microsoft and Activision Blizzard 5 working days to submit proposals to address the CMA’s concerns.
In a blog post Microsoft said they did not purchase Activision for its gaming catalogue, but rather its expertise in mobile gaming, saying: Bringing more games to mobile platforms, however, requires new capabilities. The expertise that the teams at Activision Blizzard bring in developing games for mobile platforms will help us understand how to create games that engage players around the world.
Secondly Microsoft also denied planning to leverage Blizzard for Game Pass by making their games exclusive, saying: 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. We will continue to enable people to play with each other across platforms and across devices. 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. 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.
If the CMA does not find Microsoft’s arguments convincing they will be referred for a Phase 2 investigation.
During a Phase 2, the CMA appoints an independent panel to examine the deal in more depth and evaluate whether it is more likely than not that a substantial lessening of competition will occur as a result of the merger – a higher threshold than Phase 1. It typically builds on the work and evidence from Phase 1 with more third-party engagement via requests for information and use of its statutory powers in gathering internal documents. At Phase 2, the CMA will also carry out further in-depth review of the merging parties’ internal documents which show how they view competition and the market.
Microsoft says they will continue to engage with regulators with a spirit of transparency and openness as they review this acquisition.
