Microsoft’s Activision Blizzard Merger Has Been Referred For Further Investigation In The UK

The deadline has passed, and Microsoft's huge buyout of Activision Blizzard has been referred for further investigation by the UK's Competition and Markets Authority (CMA). This is being done in order to determine if the merger could undermine competition in the video games market in the UK.

Previously, the UK watchdog had completed a 'Phase 1 investigation' with its conclusions stating that it was concerned over various consequences that the proposed merger could "harm rivals". The CMA then gave Microsoft the deadline of September 8 to address these concerns. Microsoft appears not have done so, with the result that the CMA now has to do its duty and refer the case for further investigation.

The "in-depth investigation" will be carried out to determine if Microsoft's merger with Activision Blizzard could result in a "substantial lessening of competition" for games consoles and their digital storefronts, the availability of games through multi-game subscription services (think Game Pass/ PS Plus Premium), and the supply of cloud gaming services in the UK.

The CMA will investigate if the merger could harm competition and it will take a period until March 1, 2023 to do so. Since both Microsoft and Activision Blizzard are multinational corporations, the $68.7 billion deal is a complex process to see through, and needs to be approved by multiple governments. The full text of the CMA's recommendation can be read here.

In its conclusions, following its phase 1 investigation, the CMA referred to Microsoft's broader ecosystem and how folding in Activision Blizzard could affect the wider industry. It noted that Microsoft already had a leading games console in the Xbox, a leading cloud platform in Azure, and a leading PC operating system in Windows.

"The CMA is concerned that Microsoft could leverage Activision Blizzard's games together with Microsoft's strength across console, cloud, and PC operating systems to damage competition in the nascent market for cloud gaming services," its report said, while also drawing attention to how the merger could prevent "recent and future entrants into gaming".

It is known that Sony is concerned about what impact the merger could have, although this isn't exactly a surprise since they are direct competitors. PlayStation is worried that Xbox could make one of the biggest game franchises in the world, Call of Duty, exclusive to Microsoft's platforms. But Xbox boss Phil Spencer has said that it would do no such thing, at least in the short term, and revealed he was negotiating an agreement to keep Call of Duty on PlayStation for "several more years".

However, in a statement provided to GamesIndustry.biz, PlayStation CEO Jim Ryan said this proposed deal was "inadequate on many levels".

Following the CMA's referral for a more detailed investigation, Activision Blizzard CEO Bobby Kotick said he still expects the acquisition to be approved and completed by the end of June 2023.

While Kotick may have struck a confident note, it remains to be seen what conclusions the CMA will draw following its in-depth investigation. The CMA has appointed an inquiry group, from today, as it moves into phase 2 of its investigation into the merger and how it could affect the UK games market.

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