Microsoft’s Activision deal is hurting gamers, says UK watchdog – Orange County Register

By Kelvin Chan | The Associated Press

Microsoft’s stalled $68.7 billion deal to buy video game company Activision Blizzard has hit a new hurdle in the UK, where the cartel watchdog said on Wednesday it will stifle competition and hurt gamers.

Britain’s Competition and Markets Authority said its in-depth investigation found the deal could strengthen Microsoft’s position in the growing cloud gaming market and “harm UK gamers who can’t afford expensive consoles”. With cloud gaming, gamers stream games to mobile phones and handheld devices they already own.

The blockbuster deal could also hurt UK gamers by weakening “the vital rivalry” between Microsoft’s Xbox console and Sony’s competing PlayStation machines, the watchdog said in a preliminary report.

The all-cash deal, expected to be the largest in tech industry history, has met opposition from Sony and opposition from regulators in the US and Europe for giving Microsoft control of popular game franchises like Call of Duty would give , World of Warcraft and Candy Crush.

“Our job is to ensure UK players are not caught in the crossfire of global deals which over time could reduce competition and result in higher prices, less choice or less innovation,” says Martin Coleman, chair of the independent panel of experts responsible for the research carried out, according to a press release. “We have tentatively determined that this could be the case here.”

Microsoft Assistant Legal Counsel Rima Alaily said the company is “committed to providing effective and easily enforceable solutions that address the CMA’s concerns.”

Santa Monica-based Activision also said it hopes to “help the CMA better understand our industry.” In an internal email to employees, CEO Bobby Kotick said Activision looks forward to continuing constructive discussions with regulators in the UK and European Union, where a separate investigation is ongoing.

“We are also confident that the law – and the facts – are on our side,” he said.

The UK antitrust investigation is now expected to drag on for a few more months, daunting Microsoft’s hopes that a quick positive finding could help settle a lawsuit brought by the US Federal Trade Commission.

But the fact that the UK hasn’t barred the deal leaves Microsoft open for further negotiations, said William Kovacic, a former FTC chairman

“The most important thing about the decision is that it invites further discussions about solutions,” said Kovacic, now a law professor at George Washington University.

The UK regulator said it will seek feedback from interested parties, including possible options to address its competition concerns, for its final report, which is due out on March 26.

The FTC has tried to block the deal, arguing that the merger could violate antitrust laws by stifling competitors to Xbox and its growing game subscription business.

Microsoft told the FTC’s administrative judge in January that it was working to settle the UK investigation as well as the EU probe and hoped to return proposed remedies to US regulators. But encouraged by President Joe Biden to scrutinize big mergers more harshly, the Democrat-led commission has shown little appetite for talks.

“It would help the FTC tremendously if another major competition authority in the world moved to ban the transaction and not accept a settlement,” Kovacic said.

The Activision-Blizzard deal is one of several regulatory woes for Microsoft in Europe as big tech companies on both sides of the Atlantic come under extended scrutiny over fears they have become too dominant.

One of the focal points of the deal is Activision’s hit video game Call of Duty. Sony has expressed concerns about losing access to a so-called “must-have” game title, while Microsoft has promised to make it available across all platforms.

“Our long-term commitment to give Sony, Nintendo, Steam and others 100% equal access to Call of Duty preserves the benefits of the deal for players and developers and increases competition in the market,” Alaily said.

The British watchdog said options to allay his concerns are deadlocking the deal, selling part of Activision’s business, or a so-called behavioral remedy such as an agreement to make popular games like Call of Duty available on other platforms, which is his In my opinion less would be effective.

It’s not the first time the UK regulator has flexed its antitrust enforcement muscles over a big-tech deal. Last year, it blocked Facebook parent Meta’s acquisition of GIF-sharing platform Giphy over competition concerns, forcing the social media company to back out of the deal.