Three rivals told UK regulator Xbox’s Activision deal would harm competition

Three companies told the UK’s Competition and Markets Authority (CMA) that they believed Microsoft’s proposed acquisition of Activision Blizzard would harm competition.

As part of its investigation into the $69 billion deal, the CMA spoke to six third parties who are either existing competitors in console gaming or cloud gaming services, or potential competitors should the merger be approved.

In a summary of the evidence it gathered from these meetings, the CMA revealed that half of the companies said they believed the merger would have a negative impact on competition, “including by affording Microsoft the ability and incentive to foreclose potential and existing rivals in the console buy-to-play, console multi-game subscription and cloud gaming spaces”.

Two companies didn’t express concerns about the merger, while the remaining one said it was too early to determine what the impact of the deal would be.

While the identity of the third parties wasn’t disclosed, the deal has been met with fierce opposition from Sony, which has expressed concerns about Microsoft gaining ownership of the Call of Duty series, which the PlayStation maker has called “irreplaceable”.

Bloomberg sources recently claimed that Nvidia and Google had also expressed concerns about the deal to the US Federal Trade Commission, which has launched a lawsuit in an attempt to block the merger.

Following a five-month investigation, last week the CMA said it had provisionally found that the merger could reduce competition and “result in higher prices, fewer choices, or less innovation for UK gamers”.

The regulator outlined several potential structural remedies that could help clear a path to it approving the deal, including a “partial divestiture of Activision Blizzard” that could see it selling off the part of the company that deals with Call of Duty, or even the entire Activision business unit.

However, the CMA said it would also consider behavioural remedies, such as Microsoft’s offer to make Call of Duty available on other platforms post-merger, although it views these as less favourable than structural ones which rarely require monitoring and enforcement once implemented.

The CMA is now inviting responses from interested parties to its list of proposed remedies by February 22, and responses to its provisional findings by March 1. Its final report ruling on the deal is due by April 26.

Further reading

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UK regulator suggests removing Call of Duty from Microsoft’s Activision Blizzard acquisition

In its provisional conclusion, the CMA says Xbox's Activision deal 'could harm' players

Microsoft is due to present arguments for why the deal should be approved at a European Commission hearing on February 21.

The oral hearing, which won’t be public, will allow Microsoft to address the statement of objections it received from the EU last week warning about the possible anti-competitive effects of the merger.