Paul Harris discusses Microsoft
Microsoft Corp.’s planned US$69 billion purchase of Activision Blizzard Inc. will be sent for an in-depth review unless the tech giant offers remedies to address the UK watchdog’s concerns.
The Competition and Markets Authority said Thursday it was concerned about a substantial lessening of competition in the gaming consoles, multi-game subscription services and cloud gaming markets. It gave Microsoft a Sept. 8 deadline to come to an acceptable agreement with the agency.
The combination with Activision -- which owns some of the most popular franchises including Call of Duty, World of Warcraft and Guitar Hero -- will make Microsoft the world’s third-largest gaming company and boost the Xbox maker’s roster of titles for its Game Pass subscribers.
The CMA said in a statement it’s concerned Microsoft could use Activision’s games together with its own strength in the console, cloud and PC operating systems market to damage competition in the developing cloud market.
“We are concerned that Microsoft could use its control over popular games like Call of Duty and World of Warcraft post-merger to harm rivals, including recent and future rivals in multi-game subscription services and cloud gaming,” Sorcha O’Carroll, senior director of mergers at the CMA, said.
The British agency has taken a more forceful approach on recent deals, particularly by the biggest technology companies. Microsoft announced it was buying Activision in January in what was the biggest ever gaming industry deal.
“We’re ready to work with the CMA on next steps and address any of its concerns,” Brad Smith, Microsoft’s president and vice chair, said. “Sony, as the industry leader, says it is worried about Call of Duty, but we’ve said we are committed to making the same game available on the same day on both Xbox and PlayStation.”
Microsoft also released a letter Thursday from the company’s chief executive of gaming with an update on the regulatory scrutiny.
“Microsoft should be concerned because like in the US right now, UK merger enforcement is quite unpredictable,” said Jennifer Rie, an antitrust analyst for Bloomberg Intelligence. “I believe they are willing to offer concessions intended to resolve it,” Rie said.
The CMA joins other global regulators including the US Federal Trade Commission in examining the deal and previously said it was working collaboratively to review the tie-up. Regulators are likely to look closely at how Microsoft’s ownership of Activision could harm rivals by limiting their access to the company’s biggest games.
The deal will be automatically referred to an in-depth investigation if Microsoft doesn’t offer any suitable proposals. A CMA phase 2 review allows for a more thorough investigation of internal information and document requests.