The potential acquisition of Activision-Blizzard by Microsoft has hit a regulatory snag in the UK. The Competition and Markets Authority (CMA) released a report today noting several potentially anti-competitive concerns that it says need to be addressed by the companies to avoid further investigations.
The report found that in a review of the original “Phase 1” investigation, “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”. Xbox' Phil Spencer recently said that mobile and PC were the major factors in the deal.
This is followed by a second related concern over harm to competition in the cloud gaming space. With Microsoft already owning the Azure cloud platform, Xbox, and Windows, these would be integral to success in the growing cloud gaming space. But “The CMA is concerned that Microsoft could leverage Activision Blizzard’s games together with Microsoft’s strength across console, cloud, and PC operating systems to damage competition in the nascent market for cloud gaming services.“
The outcome of this first phase coming to the conclusion that there are major potential anti-competitive issues with the deal means that Microsoft and Activision-Blizzard have a period of five business days to respond to these concerns and persuade the agency that those concerns are unfounded. Or, to at least provide some detailed assurance on how they would prevent those concerns from becoming reality. If they don’t submit something suitable to address the concerns, a phase 2 investigation will be the next step.
A phase 2 investigation has a higher burden of proof regarding any claims that competition would be harmed as a result of the proposed merger, so one would guess that both companies would want to avoid that. Phase 2 would also require the CMA be able to look at the companies’ internal assessments on competition and the market.
The CMA’s Sorcha O’Carroll said, in a statement, “If our current concerns are not addressed, we plan to explore this deal in an in-depth Phase 2 investigation to reach a decision that works in the interests of UK gamers and businesses”.
For more, see the details over at the UK CMA.