The Competition & Markets Authority (CMA) has warned that the Microsoft acquisition of Activision Blizzard could be “harmful to UK gamers”.
As a result, the merger between the two games industry giants is in serious jeopardy. A final verdict from the CMA is due in April, but if the lofty remedies they suggest aren't met, the whole deal could fall to pieces.
This news was announced via an official press release from the CMA, a department focused on analysing businesses, mergers, and their impacts on the UK economy. In it, they conclude after an independent investigation that the merger would stifle competition in Cloud gaming, harming gamers who can’t afford expensive consoles, and weakening the rivalry between Xbox and PlayStation.
Martin Coleman, chair of the panel of judges that conducted this independent investigation, wrote the following: “Our job is to make sure that UK gamers are not caught in the crossfire of global deals that, over time, could damage competition and result in higher prices, fewer choices, or less innovation. We have provisionally found that this may be the case here.”
Following the publishing of these findings, the CMA has sent both Microsoft and Activision Blizzard guidance on how to resolve their concerns. In response, Microsoft can send a follow-up proposal that if adequately addressed these issues, could get the CMA’s approval at a later date.
But here’s the rub, the CMA would only be happy with the merger if certain structural remedies happen. These are, as listed in >page 3 of the notice of possible remedies document:
- Divestiture of the business associated with Call of Duty
- Divestiture of the Activision segment of Activision Blizzard, Inc
- Divestiture of the Activision segment and the Blizzard segment of Activision Blizzard, Inc
That’s right, in order for the CMA to approve of this deal, ABK would either need to sell off Call of Duty, Activision, or Activision and Blizzard. Either that, or the merger would be prohibited. That’s quite the ask!
It’s not a great development for the deal as a whole. The UK has been on of the problem countries standing in the way of the industry-shaking deal, alongside the USA as well as EU regulatory bodies who threatened to hand them an antitrust warning. One particular aspect of the UK’s CMA is that once they make their final decision, that’s that. You can’t appeal the result in court or other means, they get the final word. If in the future following further new proposals from Microsoft and Blizzard they remain worried of the harm the deal could do to UK gamers, that could spell the end for the deal.
Those in senior positions at both Microsoft and Blizzard have spoken about recent developments. Phil Spencer recently stated they had “more insight, more knowledge about what it means to work with the different regulatory boards,” and remained confident that the deal would go through.
On the other hand, Bobby Kotick was quite critical of the UK’s lean towards going against the deal, stating on CNBC yesterday “Rishi Sunak (prime minister of the UK) has said for the last year that they would like to be the Silicon Valley of Europe, or of the continent, and if deals like this can’t get through, they’re not going to be Silicon Valley, they’ll be Death Valley.”
What do you think of all this? Do you think the CMA will remain a thorn in the Microsoft x Activision Blizzard deal? Let us know below! Is the deal really a danger to UK gamers, like Fifa Ultimate team, Carabao energy drinks, and Rustlers burgers.