The Competition and Markets Authority (CMA) has warned that Microsoft’s acquisition of Activision Blizzard could be “harmful to UK gamers”.
As a result, a merger between these two gaming industry giants is in jeopardy. The CMA’s final ruling is due in April, but if the lofty remedies they recommend aren’t met, the whole deal could fall apart.
The news was announced via an official press release from the CMA, a division that focuses on analyzing businesses, mergers and their impact on the UK economy. In it, they concluded after an independent investigation that the merger would stifle competition in cloud gaming, hurt gamers who can’t afford expensive consoles, and weaken competition between Xbox and PlayStation.
Martin Coleman, chairman of the jury who conducted the independent inquiry, wrote: “Our job is to ensure that UK gamers are not caught in the crossfire of global deals which, over time, may Hurt competition and lead to higher earnings. Price, less choice or less innovation. We tentatively see that might be the case here.”
Following the publication of these findings, the CMA has sent guidance to Microsoft and Activision Blizzard on how to address their concerns. In response, Microsoft could send a follow-up proposal, which could be approved by the CMA at a later date if the issues are adequately addressed.
But the problem is that the CMA will only be satisfied with the merger if certain structural remedies occur. These are, as listed on page 3 of the Documentation Notice of Possible Remedial Actions:
- Divestment of Call of Duty-related businesses
- Divestment of Activision Division of Activision Blizzard, Inc
- Divestment of the Activision Division and the Blizzard Division of Activision Blizzard, Inc
That’s right, in order for the CMA to approve the deal, ABK would either need to sell Call of Duty, Activision, or Activision and Blizzard. Either that, or the merger will be banned. What a problem!
That’s not a great development for the whole deal. The U.K. has been one of the troubled countries holding back volatile deals in the industry, with U.S. and European Union regulators threatening to issue antitrust warnings to them. A special aspect of the UK CMA is that once they make a final decision, that’s it. You cannot appeal the outcome in court or otherwise, they have the final say. If Microsoft and Blizzard remain concerned that the deal could hurt UK gamers after further new proposals in the future, then this could mean the end of the deal.
Top figures at both Microsoft and Blizzard have spoken about recent developments. Phil Spencer recently stated that they have “more insight and more understanding of what it means to work with different regulatory committees” and remain confident that the deal will be successful.
Bobby Kotick, on the other hand, was critical of the UK’s propensity to oppose the deal, saying yesterday on CNBC that “Rishi Sunak (the UK prime minister) said last year that they want to be Silicon Valley Europe, or continental Europe, and if such a deal doesn’t go through, they They won’t be Silicon Valley, they’ll be Death Valley.”
What do you think of all this? Do you think the CMA will remain a sticking point in the Microsoft x Activision Blizzard deal? Let us know below! This deal really poses a threat to UK gamers such as Fifa Ultimate teams, Carabao energy drinks and Rustlers burgers.
