Microsoft’s game-changing acquisition of Activision-Blizzard continues to get the company in hot water. According to gamesindustry.biz, the UK’s Competition and Markets Authority (CMA) recommended that Microsoft’s acquisition should go under second phase of in-depth investigation earlier today. In the CMA’s press release, they expressed fears that the merger “…could substantially lessen competition in gaming consoles, multi-game subscription services, and cloud gaming services.”
CMA’s decision was finalized following the conclusion of their phase-1 investigation after a panel of selected individuals reviewed documents from both companies. CMA concluded that not only could this merger harm rivals within the gaming industry, but they had also received “evidence about the potential impact of combining Activision Blizzard with Microsoft’s broader ecosystem.” The CMA is concerned that Microsoft could leverage Xbox consoles, Azure a cloud platform), Windows OS and Activision-Blizzard’s games “…to damage competition in the nascent market for cloud gaming services.” These findings cemented the CMA’s resolve in continuing with their investigation.
Sorcha O’Carroll, Senior Director of Mergers at the CMA, stated the reasoning for the CMA’s decision and gave the following ultimatum on how this situation could move forward:
“If our current concerns are not addressed, we plan to explore this deal in an in-depth Phase 2 investigation to reach a decision that works in the interests of UK gamers and businesses. Phase 2 of the investigation, if it were to go through, would consist of an independent panel examining the deal in more depth, and evaluating the impact of competition following the merger in “a higher threshold than Phase 1.”
In response to the CMA, Microsoft’s president and vice chair Brad Smith released a letter to employees, detailing his willingness to go along with the investigations into the merger.
“…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,” said Smith. “As our industry continues to see numerous companies investing aggressively in gaming, including many of the world’s largest technology and media companies, government regulators are taking appropriate and deliberate steps to better understand our industry and the growing competition from around the world…”
Following the letter, Phil Spencer, CEO of Microsoft Gaming, released a blog post commenting on Microsoft’s acquisition; restating Brad Smith’s call for their continued transparency.
“…We will continue to engage with regulators with a spirit of transparency and openness as they review this acquisition,” said Spencer. “We respect and welcome the hard questions that are being asked. The gaming industry today is robust and dynamic. Industry leaders, including Tencent and Sony, continue to expand their deep and extensive libraries of games as well as other entertainment brands and franchises, which are enjoyed by players everywhere. We believe that a thorough review will show that the combination of Microsoft and Activision Blizzard will benefit the industry and players…”