Microsoft’s Activision Blizzard takeover could harm UK gamers, says CMA

UK regulators raise red flags

The UK’s Competition and Markets Authority (CMA) has published a provisional report about its investigation of Microsoft’s proposed $69 billion takeover of Activision Blizzard. It “has provisionally concluded that Microsoft’s proposed acquisition of Activision could result in higher prices, fewer choices, or less innovation for UK gamers.”

The CMA joins regulators in the EU and the US in their skepticism towards the takeover, stating that the completed deal in its current form would have negative impacts on both the console and cloud gaming markets.

While the CMA acknowledges that games like Call of Duty becoming available on Xbox Game Pass would “generate an efficiency” for consumers, it also found “that this efficiency is not enough to make up for the reduction in competition that would arise from the Merger.”

Particularly, the regulators believe that Microsoft “would have an incentive to make it [Call of Duty, ed. note] either partially or totally exclusive to Xbox.” The CMA cites commercial and strategic reasons for the company to do so, despite Microsoft repeatedly claiming in public that Call of Duty’s exclusivity is not in the company’s interest at all.

Asking Call of Duty players over the course of the investigation, the CMA found that 24% would consider switching from PlayStation to Xbox if Call of Duty were to become an exclusive. This is actually not that considerable a number, seeing as how Sony is the market leader right now, but is evidently enough for the CMA to be concerned.

The regulators have suggested a few possible remedies, which would address the issues it has raised, namely:

• Selling any part of the company dealing with Call of Duty (essentially leaving Blizzard and King, since most of Activision’s studios work on Call of Duty nowadays)
• Selling Activision (leaving Blizzard and King)
• Selling Activision and Blizzard (leaving King)

Otherwise, the CMA states, the only possible structural solution is the “prohibition of the merger.”

Behavioral remedies could also be an option and include measures like Microsoft’s standing offer to Sony to contractually keep Call of Duty on PlayStation on equal terms with other platforms for a set amount of time – a deal the company has already agreed to with Nintendo and reiterated towards Sony as a response to the CMA’s provisional findings.

However, the CMA states that it would prefer structural remedies, as “the circumstances in which the CMA might select a behavioural remedy as the primary source of remedial action are not present in this case.”

The CMA is inviting responses from interested parties to its proposed remedies by February 22, 2023, and responses to its provisional findings by March 1, 2023. The final report is due by April 26, 2023.