Microsoft’s US$69 billion Activision deal could harm UK gamers, watchdog finds

MICROSOFT’S US$69 billion acquisition of Activision Blizzard will harm competition in the UK gaming market, Britain’s antitrust watchdog has provisionally found.

The Competition and Markets Authority (CMA) said it had taken an initial view that the deal could result in a substantial lessening in competition, higher prices, fewer choices or less innovation for UK gamers, according to a statement published on Wednesday (Feb 8).

Microsoft first announced the Activision deal last year, looking to add blockbuster games like Call of Duty to a business that already includes the Xbox console, the Halo franchise and Minecraft world-building software. But the tie-up has fallen foul of global regulators who fear that Microsoft could make it harder for rival platforms to get unfettered access to Activision’s most popular titles.

Activision shares fell nearly 3 per cent in premarket trading to US$73.60 at 7.10 am New York time. Microsoft was up 1.8 per cent at US$272.30.

The CMA has asked Microsoft to respond to how it can address their concerns by Feb 22. A statutory deadline for the CMA to publish a final report is set for Apr 26, although the agency previously said it hoped to complete the investigation in advance of that date.

“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,” Martin Coleman, chair of the independent panel of experts conducting this Phase 2 investigation, said.

The US Federal Trade Commission filed a lawsuit to block the takeover in December and has scheduled an in-house trial for August. The European Commission will make a decision on its in-depth review by Apr 11 and is expected to issue a statement of objections, setting out potential reasons for blocking the deal if no remedies are forthcoming.

“We are committed to offering effective and easily enforceable solutions that address the CMA’s concerns,” Rima Alaily, Microsoft’s corporate vice-president and deputy general counsel, said. “Our commitment to grant long term 100 per cent equal access to Call of Duty to Sony, Nintendo, Steam and others preserves the deal’s benefits to gamers and developers and increases competition in the market.”

The UK watchdog’s probe has focused on whether the deal will allow Microsoft to foreclose on rival console gaming platforms, multi-game subscription services and on cloud gaming service providers through its Azure cloud platform and Windows operating system. BLOOMBERG