Microsoft’s landmark acquisition of Activision Blizzard has hit another snag. The UK Competition and Markets Authority (CMA) recently published its provisional conclusion to its investigation into the deal and it does look good.
The UK CMA launched an in-depth investigation into the proposed acquisition five months ago alongside the EU Commission. In its report, the UK antitrust watchdog found that the deal could reduce competition and "result in all gamers seeing higher prices, reduced range, lower quality, and worse service in gaming consoles over time."
The UK CMA also says Microsoft could weaken competition by making Call of Duty and other Activision franchises exclusive to console and cloud gaming services.
"The CMA provisionally found that a small number of key games, including Call of Duty (CoD), Activision’s flagship game, play an important role in driving competition between consoles," the UK CMA said. "The evidence available to the CMA, including data on how Microsoft measures the value of customers in the ordinary course of business, currently indicates that Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own consoles (or only available on PlayStation under materially worse conditions)."
It adds, "The CMA’s provisional findings note that this strategy, of buying gaming studios and making their content exclusive to Microsoft’s platforms, has been used by Microsoft following several previous acquisitions of games studios."
The UK CMA’s argument cites Microsoft’s previous acquisition of Zenimax. Upon purchasing the parent company of Bethesda, it was announced that the upcoming IPs like Redfall and Starfield would be exclusive to Microsoft platforms. Prior to the deal, Bethesda published its flagship titles such as the Elder Scrolls and Fallout series games on multiple platforms.
The antitrust regulator also adds that the merger may stifle the growth of the emerging cloud gaming service niche and "could alter the future of gaming." According to its findings, strong competition in the market could make cloud gaming better and more affordable if the merger did not push through.
The UK watchdog proposed some possible remedies including "prohibition of the merger, divestiture of a part of Activision’s business, or behavioural commitments by the Parties." The remedies suggested means that Call of Duty should not be part of the deal or at least sell off the IP to a third party.
The UK CMA is the third regulatory body to oppose the deal following the US Federal Trade Commission and the EU Commission. The US FTC filed a lawsuit in a US court to stop the merger. The EU Commission sent a statement of objection to Microsoft and Activision Blizzard last week.
The UK CMA will have until April 26, 2023, to finalize its report on the Microsoft-Activision Blizzard merger.