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The UK’s Competition and Markets Authority (CMA) has ruled that Microsoft’s planned $68.7 million acquisition of Activision Blizzard “is likely to result in a significant lessening of competition in one or more markets in the UK.” In other words, the British government believes that the agreement may be in breach of laws that ensure fair competition between companies.
This decision marking the end of Phase 1 of the CMA’s investigation into the deal. The ruling means that unless Microsoft and Activision Blizzard formally address the CMA’s concerns within 5 business days, the investigation will move to Phase 2, which will be much more in-depth and will require much more cooperation from both companies.
Investigations of this nature are normal practice when it comes to large corporate takeovers and their purpose is to protect us, the consumers, by ensuring that companies always operate in competitive markets (ie markets where they have to keep prices low and quality) high).
The CMA’s two main concerns are that Microsoft could in theory withhold Activision Blizzard content – particularly that belonging to the Call of Duty brand – from competing consoles and services, notably Sony’s PlayStation, and that the merger could make it much more difficult for rivals to compete on the new market for cloud gaming. These concerns echo those expressed by Sony in response to inquiries from the CMA’s Brazilian counterpart a month ago.
Microsoft has insisted that Call of Duty will remain multiplatform after the merger. Still, the CMA and other regulators around the world will need stronger assurances than that before the deal is allowed to go through.