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Microsoft-Activision Deal Danger To Competition Says Watchdog

The UK’s competition watchdog has ruled that Microsoft’s acquisition of Activision-Blizzard would have a substantial impact on competition.

Microsoft is looking to acquire Activision-Blizzard for over $A101 billion ($68.7 billion USD), making by far the biggest game acquisition of all time. Previously, it was Tencent’s purchase of Supercell for over A$12.6 billion ($8.6 billion USD).

The Competition and Markets Authority (CMA) has stated that it will carry out an in-depth inquiry into the acquisition following the conclusion that it would have a significant effect on competition for consoles, multi-game subscription services such as their Xbox Game Pass and game streaming.

Activision-Blizzard has some major titles under it’s belt, including Overwatch, World of Warcraft, mobile titles such as Candy Crush and the major franchise most ruffling feathers – Call of Duty.

The CMA is expressed concern on how control over these major titles would affect competition, as the acquisition could harm rival companies if Microsoft decides to refuse give them “access to Activision Blizzard games or [provide] access on much worse terms.”

“Microsoft could use its control over popular games like Call of Duty and World of Warcraft post-merger to harm rivals,” said senior director of mergers at the CMA, Sorcha O’Carroll.

“If our current concerns are not addressed, we plan to explore this deal in an in-depth Phase 2 investigation to reach a decision that works in the interests of UK gamers and businesses.”

Phase 2 of the investigation ends the initial investigation and will see the CMA assign an independent panel to investigate the deal in greater detail.

Microsoft President Brad Smith has responded to the deal moving into the next phase, saying that it is ” ready to work with the CMA on next steps and address any of its concerns.”

Sony, the company’s main rival is possibly the most concerned about the acquisition, saying that titles like Call of Duty could be come exclusive and harm competition majorly. However, Microsoft has already said that the franchise will not become exclusive and will launch equally on PlayStation.

“Sony, as the industry leader, says it is worried about Call of Duty, but we’ve said we are committed to making the same game available on the same day on both Xbox and PlayStation. We want people to have more access to games, not less.”

Smith has previously stated this and has compared this to the company’s acquisition of the biggest game in the world – “Minecraft”. When the company acquired the game in 2014, it brought it to more consoles, including PlayStation, and heavily invested in the game.

However, Sony has pointed out that previous purchases by Microsoft did result in major titles being exclusive, such as when it bought Bethesda Softworks for over A$11 billion ($7.5 billion USD).

Microsoft’s Phil Spencer said that there would be “some new titles in the future that will be exclusive to Xbox and PC players.” This includes Starfield, which is arguably one of the most anticipated games due for release.

Other game makers are concerned that the Xbox Game Pass service will marginalize games and favor its own titles.

Spencer however continues to reiterate that what it is most interested in moving forward with the acquisition is the mobile gaming market.

Mobile gaming made up 52% of industry revenue in 2021, and Activision Blizzard owns Candy Crush, which is still one of the most popular mobile games of all time after 10 years.

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