CMA sees neagtive impact for UK gamers in Microsoft's Activion Blizzard deal

After hearing that Microsoft was considering a takeover of Activision Blizzard, the Competition and Markets Authority (CMA) launched an extensive investigation in September. Since then a host of concers has been raising about the tech-giants deal. The CMA also suspects that global competition between Microsoft's Xbox and Sony's Playstation would be weakened.

“Our job is to make sure that UK gamers are not caught in the crossfire of global deals that, over time, could damage competition and result in higher prices, fewer choices, or less innovation,” Martin Coleman, chair of the independent panel of experts said. “We have provisionally found that this may be the case here.”

🎮Our in-depth investigation has provisionally found the @Microsoft and @Activision merger could reduce competition in #cloud and #console gaming markets, and harm UK gamers.https://t.co/t3apZu9PXd

A short thread on our findings ⬇️#Gaming #Xbox pic.twitter.com/2H1UhyNwL8

— Competition & Markets Authority (@CMAgovUK) February 8, 2023

With the Call of Duty series being one of the best-selling game franchises on the Playstation, the CMA sees a possible solution in spinning off the business from the Call of Duty creators or even the entire Activision arm. A spin-off like that into a standalone operation would result in a business that "may not have sufficient assets and resources to operate as an independent entity," according to watchdogs.

The CMA does not rule out divestment measures entirely, but would prefer a structural solution such as a partial sale, spin-off, or complete blockage of the deal.

“We are of the initial view that any behavioural remedy in this case is likely to present material effectiveness risks,” it said. “At this stage, the CMA considers that certain divestitures and/or prohibition are, in principle, feasible remedies in this case.”

Last year, Microsoft attempted to ally with some competitors by stating that it would offer Sony a 10-year licence to ensure that the title would remain available on Playstation consoles.
However, following the acquisition of Bethesda, the studio behind well-known games such as The Elder Scrolls saga and the Fall Out series, Microsoft decided to make some titles exclusive to its own devices.

Credit: Bethesda Softworks

“Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own consoles, or only available on PlayStation under materially worse conditions,” the CMA said. “This strategy, of buying gaming studios and making their content exclusive to Microsoft’s platforms, has been used by Microsoft following several previous acquisitions of games studios.”

In addition to the CMA, many other organisations and companies have voiced their concerns. Microsoft continues to insist on its 10-year guarantee that Call of Duty will remain available for Sony's consoles. Rima Alaily, the corporate vice-president and deputy general counsel at Microsoft said "We are committed to offering effective and easily enforceable solutions that address the CMA's concerns".

In addition to the Call of Duty series, Activision Blizzard is best known for games such as World of Warcraft, Candy Crush and Overwatch. It remains to be seen what impact the Microsoft deal will have in the end. With the acquisition, Microsoft will become the world's third-largest gaming company by revenue, trailing China's Tencent and Japan's Sony.