Microsoft told to remove ‘Call Of Duty’ from Activision acquisition by UK regulators
The UK’s Competition And Markets Authority (CMA) has shared its provisional findings into Microsoft’s acquisition of Activision Blizzard.
Last year, Microsoft acquired Activision Blizzard in a deal that cost approximately £50billion ($68billion USD). However, the move has faced ongoing criticism from numerous regulatory bodies and fans.
In September, the UK’s (CMA) voiced concerns that the merger may “harm rivals” and “damage competition” in the gaming industry following a probe it launched last summer.
The regulatory body has now shared its provisional conclusions to the investigation, and it’s not good news for Microsoft.
“A CMA investigation has provisionally concluded that Microsoft’s proposed acquisition of Activision could result in higher prices, fewer choices, or less innovation for UK gamers,” starts the report.
Our in-depth investigation has provisionally found the @Microsoft and @Activision merger could reduce competition in #cloud and #console gaming markets, and harm UK gamers.https://t.co/t3apZu9PXd
A short thread on our findings
#Gaming #Xbox pic.twitter.com/2H1UhyNwL8
— Competition & Markets Authority (@CMAgovUK) February 8, 2023
The five-month investigation saw the CMA “hear directly from business leaders at Microsoft and Activision, analyse over 3 million internal documents from the two businesses to understand their views on the market, commission an independent survey of UK gamers, and gather evidence from a range of other gaming console providers, game publishers, and cloud gaming service providers.”
The provisional report found “that a small number of key games, including Call Of Duty, Activision’s flagship game, play an important role in driving competition between consoles.”
“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,” it added.
We're concerned that restricting other platforms' access to Activision’s games could reduce the competition between #Xbox and #PlayStation in the UK, harming UK gamers. pic.twitter.com/F5fL3fP0DB
— Competition & Markets Authority (@CMAgovUK) February 8, 2023
The CMA went on to share fears that by Microsoft “buying one of the world’s most important game publishers” the company could “substantially reduce the competition that Microsoft would otherwise face in the cloud gaming market in the UK.”
“This could alter the future of gaming, potentially harming UK gamers, particularly those who cannot afford or do not want to buy an expensive gaming console or gaming PC.”
“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, the leading PC operating system (Windows) and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming).”
At this stage in the investigation, the CMA has identified two possible solutions.
The first “possible structural remedy” would be for Microsoft to sell off the part of Activision Blizzard that deals with Call Of Duty. The second is that the CMA prohibits the merger.
The regulator went on to say it will consider “any other practicable remedies” that Microsoft, or any interested third parties, may propose but they only have until February 22 to submit these suggestions ahead of the CMA issuing its final report by April 26.
The CMA also said it is aware of Microsoft’s promise to keep Call Of Duty cross-platform, which is a potential solution to their concerns, but the regulator would prefer a structural solution.
Following the provisional report, Microsoft released a statement that said: “We are committed to offering effective and easily enforceable solutions that 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. 75 per cent of respondents to the CMA‘s public consultation agree that this deal is good for competition in UK gaming.”
Expanding on the “long term 100 per cent equal access” promise, Microsoft said: “When we say equal, we mean equal. 10 years of parity. On content. On pricing. On features. On quality. On playability.”
Earlier this year, it was reported that it was “likely” Microsoft would receive an EU antitrust warning, with the European Commission drawing up its “statement of objections” to the deal. These objections will need to be addressed before the deal can go ahead.
But in November 2022 Microsoft confirmed it was set to offer “remedies” to EU antitrust regulators in response to their formal objections. The following month, North America’s Federal Trade Commission (FTC) confirmed it too would be trying to stop Microsoft’s takeover of Activision Blizzard.
Phil Spencer, Microsoft Gaming CEO, has claimed on several occasions that the company’s acquisition of Activision Blizzard is more about mobile gaming, rather than restricting AAA titles like COD while Activision Blizzard boss Bobby Kotick has claimed that blocking Microsoft’s acquisition would harm the UK’s aim of becoming a technology superpower.
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Ali Shutler
NME
