UK Regulator Recommends In-Depth Probe of Microsoft's Activision Acquisition

The UK's Competition and Markets Authority has determined that Microsoft's acquisition of Activision Blizzard may potentially hinder competition in the UK market. In its phase one ruling, the authority stated that the merger could substantially reduce competition in the market. Unless Microsoft and Activision provide suitable assurances to address these concerns, the deal will likely be subject to a comprehensive phase two investigation. The regulator analyzed thousands of internal documents and data from both companies, concluding that the merger could impact competition in two key ways: Microsoft may restrict or degrade Activision's content on other gaming platforms or subscription services, and the combined entity could leverage its ecosystem to create barriers for rivals in cloud gaming services. The ruling also notes that Microsoft's control over popular franchises like Call of Duty, World of Warcraft, and Candy Crush could potentially harm consumers by weakening Sony's ability to compete, as well as that of other existing and potential gaming market rivals. Microsoft and Activision have until September 8 to provide a formal undertaking to the CMA, demonstrating that the deal will not result in a substantial lessening of competition. If the undertaking is not accepted or sufficient evidence is not provided, the investigation will proceed to phase two. In response to the CMA's decision, Microsoft president Brad Smith stated that the company is prepared to cooperate with the regulator and address any concerns. Meanwhile, Activision Blizzard CEO Bobby Kotick expressed confidence that the deal will be approved by the end of Microsoft's fiscal year, citing progress in the regulatory approval process and the company's commitment to cooperating with regulators.