The UK government’s Competition and Markets Authority (CMA) is concerned that Microsoft’s acquisition of Activision Blizzard could “substantially lessen competition” in consoles, multi-game subscription services, and cloud gaming services.
According to a public notice from the CMA, it is concerned that should Microsoft purchase Activision Blizzard, it would harm rivals by refusing access to the company’s games, such as Overwatch or Call of Duty, or providing access on bad terms.
The CMA said it received evidence about the “potential impact” of combining Activision Blizzard with Microsoft’s broader ecosystem. It feels the latter could “leverage Activision Blizzard’s games” with its strength across console, cloud, and PC operating systems to “damage competition in the nascent market” for cloud gaming services.
The body has already finished Phase 1 of its investigation into the acquisition and is considering launching an in-depth Phase 2 investigation. Phase 1 identified a realistic prospect of “significant lessening” of competition in gaming consoles, multi-game subscriptions, and cloud gaming services. Phase 2 would allow an independent panel of experts to probe the risks in a more depth investigation.
To that end, Microsoft and Activision Blizzard have been given five working days to submit proposals to address the CMA’s concerns. If suitable proposals are not submitted, a Phase 2 investigation will commence.
In response, Activision CEO Bobby Kotick posted an open letter regarding the possibility of a Phase 2 investigation by the UK’s CMA.
Kotick’s public letter discusses how Activision Blizzard has been aware from the start that convincing regulating bodies the acquisition should go through would be a “long process.” He also states the companies are more than willing to cooperate with the CMA and other regulators.
“As we said from the outset, this is a long process. With the number of government approvals required, we still believe the deal is most likely to close in Microsoft’s fiscal year ending June of next year,” said Kotick. “We are fortunate to have already received approvals from a couple of countries, and the process with all of the regulators is generally moving along as we expected.
“This week we heard from the United Kingdom, where we have more employees than anywhere except North America. We have entered the second phase of our review there, and we will continue to fully cooperate with the regulators there, and everywhere approvals are required.”
Earlier this week, Microsoft Gaming CEO Phil Spencer reiterated the company’s intention not to keep Call of Duty games off other platforms. He also reiterated the firm’s commitment to making the same game version available to PlayStation users upon release.
“We will continue to enable people to play with each other across platforms and devices,” said Spencer. “We know players benefit from this approach because we’ve done it with Minecraft, which continues to be available on multiple platforms and has expanded to even more since Mojang joined Microsoft in 2014.”