UK regulator claims that Activision Blizzard Microsoft merger will 'hurt competition'

What you need to know

• The UK Competition and Markets Authority shared its provisional findings from its investigation of Microsoft's purchase of Activision Blizzard.
• The CMA found that the deal "raises concerns about cloud and console gaming."
• Microsoft could stifle competition in cloud gaming by acquiring Activision Blizzard, according to the CMA.

The UK Competition and Markets Authority (CMA) shared its provisional findings regarding Microsoft's purchase of Activision Blizzard. The governing body found that the deal "raises concerns about cloud and console gaming." The summary of the findings highlighted potential stifling of competition within the cloud gaming space as well as issues related to console gaming.

According to the CMA, Microsoft purchasing Activision Blizzard "could result in higher prices, fewer choices, or less innovation for UK gamers."

The CMA argued that Microsoft's cloud gaming efforts would benefit from having exclusive content. The statement did not mention Microsoft's promise to keep Call of Duty available on multiple platforms for 10 years.

The findings also pointed to Microsoft's dominance in the PC operating space (Windows) and cloud infrastructure (Azure and Xbox Cloud Gaming).

Some of the points made by the CMA have raised eyebrows and led to questions. One portion states that the "merger could make Microsoft even stronger in cloud gaming, stifling competition in this growing market and harming UK gamers who cannot afford expensive consoles." That phrasing is confusing, as it seems to connect console gaming to cloud gaming.

There's a chance that the CMA means that there is a segment of gamers that are not interested in or able to purchase consoles that would be affected by Microsoft purchasing Activision Blizzard.

These are provisional findings, meaning that interested parties have time to suggest possible remedies to the CMA's concerns. The deadline for those responses in this case is March 1, 2023.

"The CMA welcomes responses from interested parties to its provisional findings by 1 March 2023 and its notice of possible remedies, which sets out potential options for addressing its provisional concerns, by 22 February 2023. These will be considered ahead of the CMA issuing its final report, which is due by 26 April 2023," said the CMA.

Presumably, Microsoft and Activision Blizzard will take the opportunity to respond to the CMA's provisional findings. Activision CEO Bobby Kotick shared strong words with UK regulators recently.

Microsoft's response to the CMA

Microsoft shared the following statement with us in response to the CMA's provisional findings (emphasis by Microsoft):

We are committed to offering effective and easily enforceable solutions that address the CMA's concerns. 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. 75% of respondents to the CMA‘s public consultation agree that this deal is good for competition in UK gaming," said Rima Alaily, Microsoft Corporate Vice President and Deputy General Counsel. they added:

What does 100% mean?

When we say equal, we mean equal. 10 years of parity. On content. On pricing. On features. On quality. On playability.

Activision Blizzard's response

Activision Blizzard shared the following in response to the CMA's provisional findings:

“These are provisional findings, which means the CMA sets forth its concerns in writing, and both parties have a chance to respond. We hope between now and April we will be able to help the CMA better understand our industry to ensure they can achieve their stated mandate to promote an environment where people can be confident they are getting great choices and fair deals, where competitive, fair-dealing business can innovate and thrive, and where the whole UK economy can grow productively and sustainably.”

This is a developing news story, and we will add more information as it becomes available.