The ax of the British competition authority fell: the takeover of Activision-Blizzard by Microsoft would pose a risk for the market.
The event was expected, the British Competition and Markets Authority (CMA), issued the first conclusions of its investigation into the proposed takeover of Activision Blizzard by Microsoft. According to authority, the proposed takeover might harm the UK consumer.
The question of cloud gaming
First argument put forward by the CMA to support its conclusion: the cloud gaming market. According to the authority, which recalls having analyzed more than 3 million internal documents for its investigation, the game catalog will be crucial for cloud gaming services.
With the acquisition of Activision Blizzard, Microsoft would get its hands on overly popular licenses that would unbalance this nascent market. The CMA notes that Microsoft already occupies 60 to 70% of the market share in this new sector and can count on other decisive forces to establish itself in the long term: its place in the PC market with Windows, cloud with Azure and gaming with Xbox.
The CMA tentatively found that buying one of the world’s largest game publishers would reinforce that strong position and significantly reduce the competition Microsoft would otherwise face in the UK cloud gaming market. It might change the future of games and hurt UK gamers, especially those who can’t or won’t buy an expensive gaming console or PC.
And game consoles
Secondly, the CMA also highlights the famous question of the availability of Call of Duty and popular Activision licenses on competing Xbox consoles, especially the PlayStation. The authority recalls that with its previous takeovers, Microsoft has chosen to make new games from its studios, Xbox exclusives.
Currently, the Xbox and PlayStation consoles are in close competition and access to the most important content, such as CoD, is an important element of this competition. By reducing this competition between Microsoft and Sony, all gamers might see prices go up, range shrink, quality go down, and service deteriorate in game consoles over time.
And now ?
Microsoft has until March 1, 2023 to formulate a response and negotiate compromises to reassure the competition authority. The CMA’s final decision is scheduled for April 26, 2023, the same month the European Union issues its ruling.
The compromises demanded by the CMA
In its documents, the competition authority offers a list of compromises that it deems acceptable and on which Microsoft will be able to work.
- Complete separation of activity Call Of Duty (which would therefore remain independent of Microsoft following the takeover);
- Separation of Activision from the group: Microsoft would only buy Blizzard and King;
- Separation of Activision and Blizzard from the group: Microsoft would only buy King.
In its notes, the authority indicates that it is however ready to hear a set of other measures, which includes the compromises of access to the licenses. Here, the CMA refers to the famous 10-year contract for access to Call of Duty offered by Microsoft to Sony, Nintendo and Valve. However, she is very clear that this contract alone is not enough to convince her.
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