Microsoft's $68.7 billion acquisition of video game publisher Activision Blizzard faces a further regulatory review in the United Kingdom, where the Competition and Markets Authority (CMA) aims to decide by Aug. 29 whether to launch a full investigation. The CMA said on Saturday that it had invited comments from the public by Aug. 13 on the impact of the deal, which would create one of the world's largest gaming companies.
Microsoft is seeking to persuade the UK's Competition and Markets Authority (CMA) to approve its acquisition of video game publisher Activision Blizzard, which the regulator has provisionally blocked on competition grounds. According to The Verge Microsoft has filed a new document with the CMA, highlighting some recent developments that could affect the regulator's assessment of the deal.
Recent developments Microsoft hopes will appease the CMA
- Microsoft's cloud gaming agreements with other platforms and publishers, which are subject to EU oversight and could reduce its market power in online gaming.
- A new contract between Activision and Sony, which ensures that Call of Duty, one of Activision's most popular franchises, will remain available on PlayStation consoles for several years.
- New evidence from the US Federal Trade Commission (FTC), which is suing Activision for allegedly deceiving its investors and employees about its workplace culture and misconduct allegations. Microsoft claims that this evidence contradicts the CMA's findings that Activision is a strong and innovative competitor in the gaming industry.
Winning Over Regulators and Eventually Sony
Microsoft is also preparing a final proposal to modify the terms of the merger agreement, which could involve divesting some of its cloud gaming assets in the UK to address the CMA's concerns. Microsoft hopes to convince the CMA to reconsider its provisional decision and allow the deal to go ahead.
Microsoft is on the verge of sealing the deal to buy Activision Blizzard after a US court thwarted the Federal Trade Commission's attempt to stop the merger earlier this month. The only obstacle left is the UK regulator. Call of Duty is the crown jewel of Activision, the most lucrative and popular franchise in the gaming industry. Activision also owns other hit games like Candy Crush, Diablo, and Warcraft, but none of them can match the appeal of Call of Duty, which attracts millions of players across platforms.
Microsoft knows this, and has promised to keep Call of Duty accessible to everyone, not just Xbox and PC gamers. It has signed 10-year contracts with cloud gaming services like Boosteroid, mobile operators like EE in the UK, and even Nintendo. But Sony has been stubborn, refusing to cooperate with Microsoft and lobbying regulators to block the merger. Sony has accused Microsoft of plotting to ruin Call of Duty on PlayStation, a game that Sony has confessed is “irreplaceable”.
But Sony's resistance was futile, as a US court dismissed the FTC's case against Microsoft and Activision, clearing the way for the merger to go ahead. Sony had no choice but to make peace with Microsoft and secure a deal for Call of Duty on PlayStation. Otherwise, it would risk losing its loyal fanbase and its competitive edge in the console market.