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The acquisition of Activision Blizzard by Microsoft for $69 million will hurt competition in the UK gaming market, Britain’s antitrust watchdog tentatively warned, saying it could force the sale of the hit franchise Call of Duty.
The Competition and Markets Authority said it had taken an initial view that the deal could result in a substantial decrease in competitionhigher prices, fewer options, or less innovation for players from the United Kingdom, according to a statement published this Wednesday.
Microsoft first announced the deal with Activision last year, looking to add games like Call of Duty to a business that already includes the Xbox console, the franchise Halo and the world building software Minecraft. But the deal has fallen out of favor from global regulators who fear Microsoft could make it harder for rival platforms to get unrestricted access to Activision’s most popular titles.
Activision shares fell nearly 3 percent in premarket trading to 73.60 as of 7:10 a.m. New York time. Microsoft rose 1.8 percent to $272.30.
The British agency has suggested a series of structural remedies including the divestment of the business associated with Call of Duty, Activision’s part of the business or blocking the merger altogether. The CMA also said it would consider a behavioral remedy that would promise rivals to agree to Call of Duty, though he noted concerns about his ability to handle them.
The CMA has asked Microsoft to respond to how you can address your concerns by February 22. The legal deadline for the CMA to publish a final report is set for April 26, although the agency previously said it hoped to complete the investigation before then.
“Our job is to make sure UK players don’t get caught in the crossfire of global deals that, over time, could hurt competition and result in higher prices, less choice or less innovation. We have tentatively found that this may be the case here,” said Martin Coleman, chair of the independent panel of experts conducting this Phase 2 investigation.
The US Federal Trade Commission filed a lawsuit to block the acquisition in December and has scheduled an internal trial for August. The European Commission will make a decision on its in-depth review by April 11 and is expected to issue a statement of objections, setting out possible reasons to block the deal if there are no solutions.
“We are committed to delivering effective and easily enforceable solutions that address CMA concerns,” said Rima Alaily, corporate vice president and deputy general counsel at Microsoft. “Our commitment to grant long-term 100 percent equal access to Call of Duty a SonyNintendo, Steam and others preserves the benefits of the agreement for players and developers and increases competition in the market.
The UK watchdog’s investigation has focused on whether the deal will allow Microsoft to foreclose on rival console gaming platforms and cloud gaming service providers.
“The CE and CMA steps are a normal part of their assessment process. It opens the door to discuss various commitments that Microsoft can make to allay concerns as part of ongoing dialogue and engagement with regulators,” Bobby Kotick, Activision’s chief executive, said in an email to employees seen by Bloomberg.
the competitor Sony has been a vocal opponent of the deal and said that “it is a game changer that it poses a threat to an industry,” in response to the CMA investigation. It has also been challenged in US and EU investigations. Sony also highlighted its concerns about the future impact on the nascent cloud gaming industry.
A Sony spokesperson did not immediately respond to a request for comment.
