UK government says Microsoft Activision Blizzard acquisition could harm millions of gamers

POLICY

The United Kingdom’s Competition and Markets Authority said today that Microsoft Corp.’s $69 billion acquisition of gaming behemoth Activision Blizzard Inc. could harm competition in the U.K. gaming market.

The CMA said in its provisional findings that Microsoft’s largest-ever acquisition might result in steeper prices for gamers and fewer choices in the U.K. market while hurting innovation. This is certainly a wrench in the works for Microsoft, but something the company may be able to remedy.

Microsoft’s ambition to buy one of the biggest game makers in the world has been anything but a smooth ride. Late last year, the U.S. Federal Trade Commission filed a suit to prevent the deal from going through, stating it would harm competition in the market. That came after the European Union launched a probe into the acquisition, and the CMA was already busy with its own investigation.

Microsoft hopes that by buying the “Call of Duty” maker, it might better contend with other giants in the market, namely Sony Corp. and China-based Tencent Holdings Ltd. Indeed, if Microsoft can eventually secure the deal and enjoy Activision Blizzard’s 368 million monthly active users and healthy revenue, it will make the company the third-largest gaming company on the planet behind the aforementioned duo.

One of the CMA’s concerns is that if Microsoft gets what it wants, tremendously popular games released by Activision Blizzard will fall into the hands of Microsoft, which may lead to the company exploiting its position by putting restrictions on the games.

“The evidence suggests that, after the Merger, Microsoft would find it commercially beneficial to make CoD exclusive to Xbox or available on Xbox on materially better terms than on PlayStation,” wrote the regulator. “We provisionally found that this would substantially reduce competition in gaming consoles to the detriment of gamers – Xbox and PlayStation gamers alike – which could result in higher prices, reduced range, lower quality, worse service, and/or reduced innovation.”

Microsoft has said it will address the CMA’s concerns, solutions that the company will have to explain anytime before the deadline of Mar. 1. Microsoft has already said that it will make “Call of Duty” available to other platforms without any restrictions for the next 10 years, although there’s also the possibility that Microsoft may just spin off the game in order to placate the CMA.

“Our commitment to grant long-term 100% 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,” said Rima Alaily, Microsoft’s corporate vice president and deputy general counsel.

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