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Microsoft's buying Activision may harm competition, says UK's antitrust watchdog

Microsoft's buying Activision may harm competition, says UK's antitrust watchdog
2 Sep, 2022
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UK’s anti-competition watchdog Competition and Markets Authority (CMA) said that Microsoft's acquisition of Activision Blizzard will hurt competition as Microsoft can use its control over Call of Duty and World of Warcraft games to stifle competition in cloud gaming, multi-game subscriptions, and gaming consoles. 

The watchdog recommended an in-depth investigation into the deal. 

“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,” said Sorcha O’Carroll, senior director of mergers at CMA. 

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In February, Bloomberg reported that US’ antitrust agency Federal Trade Commission (FTC) is also planning to open an investigation into the deal and examine its impact on competition.

Microsoft announced in January that it is acquiring Activision Blizzard for a record amount of $68.7 billion. Microsoft claimed at that time that this deal would make it the third-largest gaming company in the world after Tencent and Sony, in terms of revenue. 

Microsoft and Activision said that they will cooperate with CMA. In response to CMA’s comments, Microsoft Gaming head Phil Spencer said in a September 1 blog post that Microsoft will continue to engage with regulators and be transparent and open during the review of the acquisition. 

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Spencer assured that his company has no plans to block the launch and availability of Call of Duty games on Sony PlayStation or other platforms. 

He pointed out that after the acquisition of Mojang, Minecraft remained available on multiple platforms and has expanded to even more. 

Activision is one of the leading game publishers in the world and owns multiple game development companies such as Treyarch, Infinity Ward, and Raven Software. Its Call of Duty series is one of the most played games ever and is available on all major gaming consoles and platforms played by over 400 million gamers worldwide. 

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After the deal was announced, several gaming service providers including Sony expressed concern and urged Microsoft to respect the contractual agreements and to ensure that Activision games are available on all platforms in the future. 

Though Microsoft has a fairly significant gaming business that includes several games, the Xbox gaming console, and a cloud gaming platform, the company has been on an expansion spree acquiring several large and small game studios. Before Activision, Microsoft acquired another large gaming company Bethesda Softworks for $7.5 billion. The deal was finalised in March after a regulatory approval from the EU. Microsoft controls 23 game studios developing games for its console and cloud gaming platforms.