Microsoft takeover of Activision Blizzard ‘may damage competition’ – watchdog

Microsoft’s proposed acquisition of gaming firm Activision Blizzard could result in higher prices, fewer choices or less innovation for UK gamers, the Competition and Markets Authority (CMA) has said.

In the provisional findings of its five-month investigation into the 68.7 billion dollar (£56.7 billion) deal, the CMA said the merger could make Microsoft stronger, stifle competition and harm the rivalry between its Xbox console and Sony’s PlayStation.

Activision Blizzard is the maker of a number of popular video games series, including Call Of Duty, and rivals have raised concerns that Microsoft taking over Activision could see their access to the hugely popular franchise restricted – something Microsoft has denied.

The CMA said it found that buying one of the world’s most important game publishers would reinforce Microsoft’s strong position and substantially reduce the competition that Microsoft would otherwise face in the cloud gaming market in the UK, as well as in console gaming, if access to certain games on other platforms was reduced.

The competition watchdog said it has written to the parties involved with a notice of possible remedies for addressing its provisional concerns, and has asked for a response by February 22, ahead of the publication of the CMA’s full report on April 26.

Martin Coleman, chair of the independent panel of experts conducting the investigation into the deal, said: “It’s been estimated that there are around 45 million gamers in the UK, and people in the UK spend more on gaming than any other form of entertainment including music, movies, TV and books.

“Strong competition between Xbox and PlayStation has defined the console gaming market over the last 20 years. Exciting new developments in cloud gaming are giving gamers even more choice.

“Our job is to make sure that UK gamers are not caught in the crossfire of global deals that, over time, could damage competition and result in higher prices, fewer choices, or less innovation. We have provisionally found that this may be the case here.

“We have also today sent the companies an explanation of how our concerns might be resolved, inviting their views and any alternative proposals they wish to submit.”

In response, Microsoft’s corporate vice president and deputy general counsel, Rima Alaily, said: “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.

“Seventy-five per cent of respondents to the CMA‘s public consultation agree that this deal is good for competition in UK gaming.”