📚 UK Challenges $69 Billion Microsoft/Activision Deal, Citing Potential Harm To Gamers

An anonymous reader quotes a report from Ars Technica: The United Kingdom's Competition and Markets Authority (CMA) is challenging Microsoft and Activision Blizzard to justify their planned merger, saying the deal "could substantially lessen competition" in the gaming industry. A CMA announcement today cited concerns about "competition in gaming consoles, multi-game subscription services, and cloud gaming services (game streaming)." Microsoft announced its plan to buy Activision Blizzard for $68.7 billion in January. "Microsoft is one of three large companies, together with Sony and Nintendo, that have led the market for gaming consoles for the past 20 years with limited entries from new rivals," the CMA said. "Activision Blizzard has some of the world's best-selling and most recognizable gaming franchises, such as Call of Duty and World of Warcraft. The CMA is concerned that if Microsoft buys Activision Blizzard it could harm rivals, including recent and future entrants into gaming, by refusing them access to Activision Blizzard games or providing access on much worse terms." The CMA said these "concerns warrant an in-depth Phase 2 investigation," so Microsoft and Activision Blizzard have been ordered "to submit proposals to address the CMA's concerns" within five working days. "If suitable proposals are not submitted, the deal will be referred for a Phase 2 investigation," which would "allow an independent panel of experts to probe in more depth the risks identified at Phase 1," the CMA said. Besides Microsoft's Xbox console, the CMA noted Microsoft's Azure cloud computing platform and the Windows operating system. "The CMA is concerned that Microsoft could leverage Activision Blizzard's games together with Microsoft's strength across console, cloud, and PC operating systems to damage competition in the nascent market for cloud gaming services," the announcement said. "A Phase 2 investigation (PDF) can result in a merger being prohibited or a requirement to sell some parts of the business," notes Ars. "A Phase 2 investigation is typically limited to 24 weeks but can be extended by up to eight weeks." "After a final report, 'the CMA has a statutory deadline of 12 weeks (extendable by up to six weeks for special reasons) to make an order or accept undertakings to give effect to its Phase 2 remedies.'"

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