UK competition regulator finds Microsoft-Activision deal 'could lead to competition concerns'

Microsoft has five days to respond to the initial objection.

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SHANGHAI, CHINA - AUGUST 2, 2019 - Photo taken on Aug. 2, 2019 shows the Blizzard Entertainment booth at Chinajoy China Digital Interactive Entertainment Expo in Shanghai, China. January 19, 2022 - Microsoft will buy Activision Blizzard for $68.7 billion, the largest acquisition in corporate history. When the deal closes, Microsoft will become the world's third-largest gaming company behind Tencent and SONY. (Photo credit should read Xing Yun / Costfoto/Future Publishing via Getty Images)
Future Publishing via Getty Images

The United Kingdom’s antitrust regulator is concerned that Microsoft’s blockbuster purchase of Activision Blizzard could create a monopoly in the nascent cloud gaming space. The Competition and Markets Authority (CMA), which began investigating the deal back in July, says that it’s not yet reassured by the promises Microsoft has made to get the deal done. It feels that, once Activision is a part of Microsoft, the Xbox maker could use its “control over popular games like Call of Duty and World of Warcraft” to “harm rivals” by boxing them out of access to popular titles. Microsoft has already publicly committed not to hoard exclusives, (and said that Actiblizz's library isn't all that anyway) but sweet words haven’t appeased the officials.

In a statement, it said that it was giving Microsoft and Activision five days to submit proposals that would address its concerns. If those did not pass muster, however, then the office will open a lengthy “Phase 2” investigation involving an independent panel to scrutinize the deal in greater depth. That will likely delay any completion of the deal, which would then only be rubber-stamped if regulators were convinced that the deal would not cause a “substantial lessening of competition.” It’s likely that, whatever happens, Microsoft will need to commit to not using its growing clout to hurt other companies in the space by depriving them of key franchises.

Microsoft’s gaming chief Phil Spencer has already responded to the announcement, affirming the previous pledge not to pull Call of Duty from PlayStation, for instance. Spencer pointed to the cross-platform appeal of Minecraft, a title Microsoft purchased in 2014, as evidence of the company’s good faith. Activision CEO Bobby Kotick published an open letter to employees, saying that the company will “fully cooperate” with regulators, which are taking “appropriate” steps to ensure that there are no risks to competition.

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UK competition regulator finds Microsoft-Activision deal 'could lead to competition concerns'