In January 2022, Microsoft revealed its intention to acquire Activision Blizzard for $68.7 billion, a deal that has since been under regulatory scrutiny. Among the concerned regulators was the British Competition and Markets Authority (CMA), which initially expressed apprehensions that the merger could substantially lessen competition in gaming consoles, multi-game subscription services, and cloud gaming services. However, the CMA has recently narrowed its scope of concerns after reviewing new evidence.
Background on the CMA’s Initial Concerns
The CMA’s original concerns were based on the possibility that Microsoft would leverage Activision Blizzard’s game catalogue to strengthen its position in the streaming game market. This prompted the CMA to consider a more in-depth Phase 2 investigation, giving Microsoft and Activision Blizzard five working days to address their concerns. In response, Microsoft clarified its acquisition motives and reassured that it would not make popular franchises like Call of Duty exclusive to their platforms.
Updated Provisional Findings
On March 24, 2023, the CMA published updated provisional findings after receiving significant new evidence in response to its original findings. The updated analysis showed that making Activision’s games exclusive to Microsoft’s consoles would not be commercially beneficial due to potential loss-making scenarios. Consequently, the CMA revised its provisional conclusion and determined that the acquisition would not substantially lessen competition in the UK’s console gaming market.
Continued Investigation in Cloud Gaming Services
While the CMA’s concerns regarding console gaming have been alleviated, its concerns about cloud gaming services remain unchanged. The investigation continues, and the CMA is expected to issue its final report by April 26, 2023.
Conclusion
The updated provisional findings from the CMA indicate that the Microsoft-Activision merger might not result in a substantial lessening of competition in the UK’s console gaming market.
