Investigation concludes that Microsoft's Activision Blizzard deal 'could harm gamers'

An investigation by the Competition and Markets Authority (CMA) has concluded that Microsoft's proposed $68.7 billion acquisition of Activision Blizzard could lead to higher prices, fewer choices and less innovation.

The UK regulator has been looking into the planned takeover for a number of months, and has now warned that the merger, "could make Microsoft even stronger in cloud gaming, stifling competition in this growing market". The CMA also says there is a risk of, "weakening the important rivalry between Xbox and PlayStation gaming consoles", ultimately harming gamers who cannot afford expensive consoles.

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As part of its investigation, the CMA says that it has analyzed more than three million internal documents from Microsoft and Activision, as well as speaking to people from the two companies, surveying gamers, and talking with rivals.

Presenting its findings, the regulator says:

The evidence available to the CMA currently indicates that Microsoft would find it commercially beneficial to make Activision's games exclusive to its own cloud gaming service (or only available on other services under materially worse conditions). Microsoft already accounts for an estimated 60-70% 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).

The CMA provisionally found that buying one of the world's most important game publishers would reinforce this strong position and 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.

While the CMA is interested in the impact the deal would have on the UK, its conclusions are very much in line with concerns that have been voiced in other parts of the world, particularly the US. Although Microsoft has previously said that it would treat rival platforms equally when it comes to the release of games, the CMA has doubts:

The CMA provisionally found that a small number of key games, including Call of Duty (CoD), Activision's flagship game, play an important role in driving competition between consoles. The evidence available to the CMA, including data on how Microsoft measures the value of customers in the ordinary course of business, currently indicates that Microsoft would find it commercially beneficial to make Activision's games exclusive to its own consoles (or only available on PlayStation under materially worse conditions). The CMA's provisional findings note that 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.

The CMA provisionally found that weakening competition by restricting the access that other platforms have to Activision's games could substantially reduce the competition between Xbox and PlayStation in the UK, in turn harming UK gamers.

More information is available on the CMA website.

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