The French Competition and Markets Authority has decided that the record acquisition of Activision Blizzard by Microsoft could affect competition in the United Kingdom.
The phase one decision, issued on September 1, said the merger “could result in a substantial lessening of competition in a market or markets in the UK”.
As a result, the deal should be sent back for a full phase two investigation unless Microsoft and Activision “offer acceptable commitments to address these competitive issues.”
The UK regulator gathered thousands of internal documents and data from both parties to understand its business and concluded that completing the merger could affect competition in two ways:
- Deal could see Microsoft ‘withhold or downgrade’ Activision Blizzard content from other consoles or subscription services
- Microsoft could leverage its wider ecosystem with Activision’s catalog to “raise barriers to entry and exclude rivals in cloud gaming services”
The decision also points out that Microsoft having control of franchises such as Call of Duty, World of Warcraft and Candy Crush may result in the company “harming consumers by impairing the ability to compete with Sony – Microsoft’s closest rival.” when it comes to gaming,” as well as other existing and potential franchises. future rivals that could bring “healthy competition” to the gaming market.
From there, Microsoft and Activision Blizzard have until September 8 to offer a commitment to the CMA that proves the deal won’t result in a substantial lessening of competition. If no substantial evidence is provided or the undertaking is not accepted by the AMC, the investigation will proceed to phase two.
Microsoft President and Vice President Brad Smith responded to the CMA’s decision and said, “We are ready to work with the CMA on next steps and address any concerns. Sony, as industry leader, says he’s concerned about Call of Duty, but we said we’re committed to making the same game available the same day on Xbox and PlayStation. We want people to have more access to games, not less.
In the United States, the acquisition has already entered phase two of a similar investigation by the Federal Trade Commission, which could last until 2023.
You can read more about the agreement and the regulatory steps towards approval in our primer here.
Update: Activision Blizzard has shared a letter sent to all employees by CEO Bobby Kotick, commenting on today’s decision.
Kotick said the company still expects the deal to close by the end of Microsoft’s fiscal year (June 30, 2023), adding that the acquisition has “already received approvals from a few countries.” and that the process with other regulators is “generally moving forward”. as we expected.”
Regarding the UK – Activision Blizzard’s second-largest territory by headcount – the CEO said the publisher “will continue to cooperate fully with regulators there, and wherever approvals are required”.
He also added that staff will receive monthly updates on the acquisition and its approval process via town hall meetings, starting this month.
Additional reporting by James Batchelor