The planned Microsoft Activision acquisition has been provisionally blocked by the UK’s antitrust watchdog, the Competition and Markets Authority (CMA) …
Background
Just over a year ago, Microsoft announced a $68.7 billion deal to buy Activision, the gaming giant behind the Call of Duty franchise, and many other popular titles. The sheer scale of the planned purchase saw the CMA begin an investigation into whether it would be anticompetitive.
The investigation began last September, with similar probes also taking place in the US and EU.
Microsoft Activision acquisition provisionally blocked
The CMA has today reported the conclusions of its investigation into the proposed acquisition.
A CMA investigation has provisionally concluded that Microsoft’s proposed acquisition of Activision could result in higher prices, fewer choices, or less innovation for UK gamers.
Specifically, it said, Microsoft would be likely to make Activision games exclusive to its own platform.
The evidence available to the CMA currently indicates that Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own cloud gaming service (or only available on other services under materially worse conditions). Microsoft already accounts for an estimated 60-70% of global cloud gaming services and also has other important strengths in cloud gaming from owning Xbox, the leading PC operating system (Windows) and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming).
The CMA provisionally found that buying one of the world’s most important game publishers would reinforce this strong position and substantially reduce the competition that Microsoft would otherwise face in the cloud gaming market in the UK
It singled out the Call of Duty franchise as being especially valuable, and important to competition between Xbox and PlayStation.
The CMA provisionally found that a small number of key games, including Call of Duty (CoD), Activision’s flagship game, play an important role in driving competition between consoles. The evidence available to the CMA, including data on how Microsoft measures the value of customers in the ordinary course of business, currently indicates that 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 provisionally found that weakening competition by restricting the access that other platforms have to Activision’s games could substantially reduce the competition between Xbox and PlayStation in the UK, in turn harming UK gamers.
It is now inviting Microsoft to make proposals for ways to address these concerns, as well as welcoming comments from others, before announcing a final decision on April 26. One potential solution would be for Activision to sell the Call of Duty brand separately to an independent company before the Microsoft acquisition proceeds.
Why we’re covering this
We occasionally cover major tech stories beyond the Apple world, and this would be both the largest video game acquisition in history, as well as the largest ever purchase by Microsoft.
The CMA is the same competition watchdog which concluded that Apple’s App Store policies were anticompetitive, with an appeal due to be heard next month.
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