The UK Competitions and Markets Authority has issued a provisional report on the intended acquisition of Activision Blizzard by Microsoft, determining that this acquisition could “substantially reduce competition” in various ways.
The CMA’s report concluded, after an investigation period, “Given we have provisionally found that Microsoft already has a strong position in this market through its ownership of Xbox, a global cloud computing service, and the leading PC operating system (OS), we are concerned that even a moderate increment to its strength may be expected to substantially reduce competition in this developing market to the detriment of current and future cloud gaming users.”
This is merely the next step, and the CMA has even suggested some potential remedies that could make Microsoft's acquisition of Activision Blizzard more palatable. Microsoft has been working on offering a series of concessions already, including making a 10-year offer to Steam, Nintendo, and Sony to bring, or keep, Call of Duty on all their platforms. While Valve and Nintendo have accepted the deals that would take place after any acquisition, Sony has continued to press against the deal.
The CMA says it will consider the 10-year offer to maintain Call of Duty on other platforms in its deliberations. Other things that could be done to resolve the objections over anti-competitive concerns? The first would be, “prohibition of the merger”.
The other suggestions are also huge and not exactly likely to be palatable to Microsoft: divestiture of the Call of Duty part of the business, divestiture of Activision from Activision Blizzard, thereby also including the CoD divestiture, and finally, divestiture of Activision and Blizzard. This would presumably leave Microsoft with Candy Crush creator King, This option would separate out Call of Duty, sure, but also keep Microsoft from World of Warcraft, Overwatch, Diablo and more. Any divestiture would have to be spun off or sold to a company capable of keeping things competitive.
While “the CMA considers that certain divestitures and/or prohibition are, in principle, feasible remedies in this case” that’s unlikely to be Microsoft’s view, so we’ll see what their response will be. Microsoft and Activision Blizzard, as well as other organizations and companies on either side can react to this report by March 1st. A decision is expected later.