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In-depth competition probe launched into Microsoft’s Activision Blizzard deal

·3-min read

Microsoft’s proposed 68.7 billion US dollar (£59.7bn) takeover of games publisher Activision Blizzard is to face an in-depth investigation amid concerns the deal is anti-competitive, the UK’s competition watchdog has confirmed.

The Competition and Markets Authority (CMA) said it has referred the takeover for a so-called phase two probe after Microsoft said it would not be offering any proposals to address the regulator’s concerns.

It comes after the CMA said on September 1 it was concerned the proposed deal could lessen competition in gaming consoles, multi-game subscription services and cloud gaming.

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Call Of Duty is one of Activision Blizzard’s hit games (Tim Ireland/PA)

The CMA said it has given the two firms five working days to submit proposals to address its concerns or the deal would be referred for a more detailed phase two probe.

Phase two investigations allow an independent panel of experts to look in more depth at the risks identified in phase one.

The CMA said on Thursday that Microsoft told it on September 6 that it would not be putting forward proposals and had therefore made the referral “on the basis that, on the information currently available to it, it is or may be the case that this merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom”.

As well as being one of the world’s biggest computer companies, Microsoft is a key player in the gaming market, most notably through its Xbox range.

Activision Blizzard is best known as the maker of popular gaming series such as Call Of Duty and World Of Warcraft.

Following its initial inquiry, the CMA said it was concerned that if the deal is completed, it could harm rivals by refusing them access to Activision Blizzard games or providing access on worse terms.

The watchdog said it also received evidence about the potential impact of combining the broader ecosystems of the two companies, and that Microsoft could leverage Activision’s games alongside its own strengths in consoles, cloud computing and PC operating systems to damage competition in the growing market of cloud gaming services – where players are able to stream video games.

Sorcha O’Carroll, senior director of mergers at the CMA, said at the time: “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.”

The all-cash deal is also understood to be facing a full-blown investigation in Brussels, with the two companies reportedly having been in talks with regulators there since the acquisition was announced on January 18.

It is expected to likely to lead to a lengthy investigation in the EU once Microsoft officially files its case in Brussels.

Microsoft declined to add to a statement made earlier this month by president and vice chairman Brad Smith, who insisted the group was “ready to work with the CMA on next steps and address any of its concerns”.

He said recently: “Sony, as the industry leader, says it is worried about Call Of Duty, but we’ve said we are committed to making the same game available on the same day on both Xbox and PlayStation.

“We want people to have more access to games, not less.”