Microsoft-Activision deal could harm competition - UK regulator

The Competition and Markets Authority is concerned about the creation of a cloud gaming monopoly

Microsoft's plan to acquire Activision Blizzard could significantly affect competition in consoles, multi-game subscription services, and game streaming, according to the UK's antitrust authority.

The Competition and Markets Authority (CMA), which began looking into the deal back in July, says the merger could create a monopoly in the cloud gaming market, and it is not yet reassured by Microsoft's promises.

Microsoft announced plans to acquire Activision Blizzard, the publisher of Call of Duty and World of Warcraft, earlier this year in a $68.7 billion (£50.5 billion) all-cash deal. The acquisition is intended to help Microsoft grow its gaming business across PCs, mobile and consoles, as well as provide the building blocks for its metaverse efforts.

The Windows maker has enormous gaming budgets and aggressive ambitions. It owns 23 gaming studios, including Bethesda - creator of Fallout and Skyrim - and Mojang, the studio behind Minecraft.

However, the CMA is worried that Microsoft's acquisition of Activision Blizzard may hurt competitors by denying them access to Activision Blizzard games, or by granting access on considerably worse terms.

"Microsoft could use its control over popular games like Call of Duty and World of Warcraft post-merger to harm rivals," said Sorcha O'Carroll, senior director of mergers at the CMA.

Microsoft has previously made a public promise to refrain from hoarding exclusives, but those promises have so far failed to satisfy the officials.

According to the CMA's announcement, Microsoft and Activision have five days to submit proposals that would allay its worries.

'If our current concerns are not addressed, we plan to explore this deal in an in-depth Phase 2 investigation to reach a decision that works in the interests of UK gamers and businesses,' the regulator said.

Phase 2 probes allow an independent panel of experts to investigate the risks identified during a Phase 1 probe in more detail.

If a Phase 2 investigation concludes that a merger is problematic, the CMA will take steps to address its negative impacts. That might include blocking the deal completely, or approving it subject to a number of restrictions.

Microsoft expressed its willingness to collaborate with the CMA on the next steps in the investigation.

Phil Spencer, head of Microsoft's gaming division, reiterated the company's prior promise not to remove Call of Duty from Playstation, for instance.

He emphasised the fact that Minecraft, now an Xbox Game Studios property, is still accessible on many platforms.

"We are expanding choice in two ways: through the creation of Game Pass, which gives players a subscription option; and by bringing more games to mobile platforms.

"Bringing more games to mobile platforms, however, requires new capabilities. The expertise that the teams at Activision Blizzard bring in developing games for mobile platforms will help us understand how to create games that engage players around the world."

Spencer said the company would "continue to engage with regulators with a spirit of transparency and openness as they review this acquisition."

"We respect and welcome the hard questions that are being asked."

In an open letter to staff members, Activision CEO Bobby Kotick said that the company would "fully cooperate" with authorities as they take appropriate measures to ensure that there were no risks to competition.