Microsoft Activision deal could lessen competition

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Image Source: The Verge

According to a UK watchdog, the proposed acquisition of Activision Blizzard by Microsoft may significantly reduce competition in consoles, multi-game subscription services, and game streaming.

Microsoft wants to pay $68.7 billion (£59.2 billion) for the maker of Overwatch, Candy Crush, and Call of Duty. However, the UK’s Competition and Markets Authority (CMA) has stated that its concerns need an in-depth investigation. Microsoft stated that it was willing to collaborate with the CMA on the “next steps.”

If the purchase goes through, it will be Microsoft’s largest acquisition to date. Activision Blizzard’s games are among the most popular in the world. However, it has already been accused of allowing a toxic and sexist workplace culture.

In its decision, the CMA expressed worry that if Microsoft purchased Activision Blizzard, it would harm competitors “by forbidding them access to Activision Blizzard games or granting access on considerably worse terms.”

The CMA’s senior director of mergers, Sorcha O’Carroll, stated: “Microsoft might use its post-merger dominance over more popular games like Call of Duty and World of Warcraft to undermine competitors.

This judgment brings the CMA’s initial inquiry, known as Phase 1, to a close. In Phase 2, the CMA selects an independent panel to conduct a more thorough investigation of the transaction.

If the CMA determines that a merger is problematic, it will take efforts to mitigate its negative impacts. This could involve halting the merger or allowing it to proceed under specific circumstances.

Motive for mobility

Phil Spencer, Microsoft’s head of gaming, told Bloomberg that “the biggest gaming platform on the planet is mobile phones,” an area in which the company lacks expertise.

Activision games are already playable on both Xbox and rival PlayStation platforms, but the planned merger has prompted some to speculate that additional games may become Xbox exclusives.

In an interview with CNBC, Mr. Smith earlier rejected this, saying that great titles like “Call of Duty” will continue to be available on the PlayStation.”

He highlighted parallels with the corporation’s 2014 acquisition of Minecraft, in which he claimed the company invested in the game and expanded its distribution. Phil Spencer emphasized this idea in a blog post published on Thursday.

Microsoft’s planned acquisition of Activision Blizzard, valued at about $70 billion, shocked the games industry.

These two are both incredible behemoths, and their union would create a behemoth.

The US tech behemoth owns Xbox and has ambitious gaming goals and vast cash. It owns 23 gaming firms, including Mojang, the creator of Minecraft, and Bethesda, the creator of Fallout and SkyRim.

Call of Duty, Overwatch, Skylanders, and Diablo are some of Activision Blizzard’s biggest blockbusters.

Sony, the owner of the world’s best-selling gaming console, the PlayStation, has openly stated that it “expects” Microsoft to retain these massive blockbusters multi-platform.

But Microsoft’s Phil Spencer says he’s more interested in the mobile gaming business right now, and Activision also owns Candy Crush Saga, a basic ten-year-old game that remains one of the most successful mobile games of all time.

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It’s no surprise that competition authorities are now scrutinizing this transaction even more closely. They must be confident that a merger of this magnitude will not utterly devastate the market.

Other nations, in addition to the UK, are conducting their own anti-trust investigations, and Saudi Arabia was the first to accept the merger last month.

Prior purchases by Microsoft

Some have pointed to prior takeovers as proof that the merger could result in more new Activision Blizzard games becoming exclusive to Microsoft-owned platforms.

Microsoft successfully bought the parent company of Fallout creator Bethesda Softworks for $7.5 billion (£6.46 billion) last year.

Mr. Spencer stated at the time, “Some new titles will be exclusive to Xbox and PC players in the future.”

In a tweet, Xbox’s Aaron Greenberg revealed that Starfield, a game announced by Bethseda three years before the purchase in 2018, will not be launched on PlayStation.

Some independent game developers were also concerned that if the acquisition went through, Microsoft’s Netflix-like game subscription service Game Pass would favor its own products.

However, Sony, which manufactures PlayStation, has also been acquiring companies, most recently purchasing game developer Bungie for $3.7 billion in June.