Microsoft’s $75 billion acquisition of video game maker Activision Blizzard faces an in-depth investigation into UK competition if the US tech giant fails to address concerns on antitrust next week.
The UK’s competition regulator on Thursday said Microsoft has five days to propose remedies, making it the first global antitrust regulator to issue a warning about the transaction. this.
The deal with Activision, the largest in Microsoft’s history, would make it the third-largest gaming company by revenue, behind only China’s Tencent and Japan’s Sony.
The Competition and Markets Authority said it was concerned about Proposal to buy back could substantially reduce competition in game consoles, multi-game subscription services, and cloud games. It warned that if the transaction went ahead, it could harm rivals by denying them access to Activision games or providing access on much worse terms.
Sorcha O’Carroll, senior director of mergers at CMA, said: “Following the 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 the detriment of competitors, including recent and future competitors in cloud gaming and multiplayer subscription services. “
The deal also faces scrutiny from other regulators, according to a person familiar with the schedule, but the European Commission is not expected to begin the formal review process for at least. another month. The US Federal Trade Commission did not stick to a set timetable and did not give any clues as to its thoughts on the deal.
The CMA said that if their concerns are not resolved by Microsoft providing appropriate remedial recommendations within five business days, they will investigate the agreement using a so-called phase 2 probe. would involve an independent panel in-depth examination of the acquisition and analysis of competitive impacts.
Microsoft has tried to win over regulators and industry rivals by saying that Call of Dutyblockbuster game that brought in $30 billion in lifetime revenue for Activision, will continue to be available on other companies’ game consoles after the deal, instead of being turned into an Xbox exclusive title by Microsoft.
It has also promised that any online game stores it operates will remain open, giving rival game makers an equal opportunity to find an audience.
The US company has stated that the acquisition of Activision will leave only 13% of the gaming market, making it difficult for regulators to oppose the deal on the usual “horizontal” merger grounds that involve combination of two companies in the same market. Instead, any case is likely to lead to whether a “vertical” merger between content producers and hardware platforms hurts competition.
“We stand ready to work with the CMA on the next steps and address any concerns they may have,” said Microsoft President and Vice President Brad Smith. Sony, as an industry leader, said it was worried about Call of Duty, but we said we’re committed to delivering the same game on the same day on both Xbox and PlayStation. We want people to have more access to the game, not less.”
The CMA’s ruling comes as the UK regulator seeks to build leadership in global regulation after Brexit by taking a zero-tolerance stance on prominent deals. The UK’s withdrawal from the EU has allowed the CMA to block the major global deals that were once Brussels’ responsibility even as it had limited links to the UK.