The ax of the British competition authority has fallen: Microsoft’s takeover of Activision-Blizzard would pose a risk to the market.
The event was expected, the British competition authority, the CMA, has issued the first conclusions of its investigation into the proposed acquisition of Activision Blizzard by Microsoft.
According to the authority, the proposed acquisition could harm the British consumer.
The cloud gaming issue
First argument put forward by the CMA to support its conclusion: the cloud gaming market. According to the authority, which recalls having analyzed more than 3 million internal documents for its investigation, the game catalog will be crucial for cloud gaming services.
With the acquisition of Activision Blizzard, Microsoft would have its hands on overly popular licenses that would unbalance this nascent market. The CMA points out that Microsoft already has 60 to 70% of the market share in this new sector and can count on other decisive forces to establish itself in the long term: its place in the Windows PC market, the cloud with Azure and the games with Xbox.
The CMA tentatively found that buying one of the world’s biggest game publishers would bolster that strong position and significantly reduce the competition Microsoft would face in the UK cloud gaming market. It could change the future of gaming and hurt UK gamers, especially those who can’t or won’t buy an expensive games console or PC.
and game consoles
Secondly, the CMA also highlights the famous issue of the availability of Call of Duty and Activision’s popular licenses on competing Xbox consoles, particularly PlayStation. The authority recalls that with its previous acquisitions, Microsoft has chosen to make new games from its studios, exclusive to Xbox.
Currently, the Xbox and PlayStation consoles are in close competition and access to the most important content, such as CoD, is an important part of this competition. By reducing this competition between Microsoft and Sony, all gamers could see prices go up, reach shrink, quality go down, and service deteriorate on game consoles over time.
And now ?
Microsoft has until March 1, 2023 to formulate a response and negotiate compromises to reassure the competition authority. The CMA’s final decision is scheduled for April 26, 2023, the same month the European Union issues its ruling.
The commitments required by the CMA
In its documents, the competition authority offers a list of compromises that it considers acceptable and that Microsoft will be able to work on.
- Complete separation of activities. Obligations (which would therefore remain independent of Microsoft after the acquisition)
- Separation of Activision from the group: Microsoft would only buy Blizzard and King
- Separation of Activision and Blizzard from the group: Microsoft would only buy King
In its notes, the authority indicates that, however, it is ready to hear a set of other measures, which include license access commitments. Here the CMA refers to the famous 10-year Call of Duty access contract offered by Microsoft to Sony, Nintendo and Valve. However, she is very clear that this contract alone is not enough to convince her.
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