UK wants a closer look at the proposed acquisition of Activision Blizzard by Microsoft

The UK Competition and Markets Authority has very reasonable concerns about the effect Microsoft owning Activision will have on consumer choice and thus value.

The CMA started a preliminary investigation into the proposed $69 billion acquisition a couple of months ago and saw enough to justify a more in-depth probe. “The CMA is concerned that Microsoft’s anticipated purchase of Activision Blizzard could substantially lessen competition in gaming consoles, multi-game subscription services, and cloud gaming services (game streaming),” said the announcement.

That seems like classic British understatement when you consider the many different areas through which Microsoft already exerts considerable in. As the announcement goes on to explain: “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.”

“Following our Phase 1 investigation, we are concerned that Microsoft could use its control over popular games like Call of Duty and World of Warcraft post-merger to harm rivals, including recent and future rivals in multi-game subscription services and cloud gaming,” said Sorcha O’Carroll, Senior Director of Mergers at the CMA. “If our current concerns are not addressed, we plan to explore this deal in an in-depth Phase 2 investigation to reach a decision that works in the interests of UK gamers and businesses.”

It’s hard to imagine what Microsoft could say or do to adequately address those concerns. It will give it a go, of course, and surely can’t be surprised by the trepidation its move has caused competition authorities. A blog published today by CEO of Microsoft Gaming Phil Spencer promises that Microsoft will share its toys but those are just words. What’s to stop Microsoft doing what it wants once the deal goes through?

Given the regret expressed by regulators on both side of the pond about how laissez faire they have been about tech M&A in the past, there would seem to be a strong chance this acquisition will be blocked. In fact there’s a good argument that any acquisition attempted by one of the three dominant public cloud providers should undergo extra scrutiny as a matter of principle. They already have so much power over the digital economy that giving them more is almost bound to distort the associated markets in some way.

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