CMA rejects Microsoft’s takeover of Activision

Microsoft’s proposed acquisition of gaming firm Activision Blizzard could result in higher prices, fewer choices and less innovation for the British video game market, the UK’s regulator has said.

The CMA has published the conclusions of its investigation into the $68.7bn (£56.7bn) merger, which would see Xbox-maker Microsoft acquire hit titles such as Call of Duty and Candy Crush. The deal has been hailed as the “biggest takeover in tech history”. 

The investigation has included holding site visits and hearings to hear directly from business leaders at Microsoft and Activision, analysing over three million internal documents from the two businesses, commissioning an independent survey of UK gamers, and gathering evidence from a range of other gaming console providers, game publishers, and cloud gaming service providers, the regulator has said. 

“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,” said Martin Coleman, the chair of the independent panel of experts conducting the investigation. “We have provisionally found that this may be the case here.”

In response, Microsoft said it would find solutions to “address the CMA’s concerns”.

“Our commitment to grant long-term 100 per cent 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,” said Rima Alaily, Microsoft corporate vice-president and deputy general counsel.

She added that 75 per cent of respondents to the CMA’s public consultation “agree that this deal is good for competition in UK gaming”.

In turn, Activision wrote, “we hope between now and April we will be able to help the CMA better understand our industry” in order to help the regulator “achieve their stated mandate” to promote an environment where “fair-dealing business can innovate and thrive”.

It is estimated that there are around 45 million gamers in the UK, which would be directly affected by the deal, according to CMA figures. Microsoft already accounts for an estimated 60-70 per cent of global cloud gaming services and also has other important strengths in cloud gaming from owning Xbox, Azure and Xbox Cloud Gaming.

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 22 February, ahead of the publication of the CMA’s full report on 26 April.

Some of the remedies suggested include selling or spinning off the business that makes Call of Duty, or the entire Activision arm of the combined Activision Blizzard.

However, the watchdog acknowledged that a spin-off into a standalone operation would mean the new business “may not have sufficient assets and resources to operate as an independent entity”.

Earlier today, Microsoft made headlines after launching a revamped version of its search engine Bing, powered by the popular AI chatbot ChatGPT. 

The news comes only a few days after announcing that it would be cutting 10,000 jobs in the latest round of redundancies to hit the tech industry