UK competitions regulator the Competition and Markets Authority (CMA) has provisionally concluded that Microsoft’s pending $68.7bn (~£50.5bn) acquisition of Activision Blizzard would be harmful.
An investigation by the CMA found that the acquisition could result in higher prices, fewer choices, or less innovation for gamers in the United Kingdom.
Microsoft announced that it had agreed to acquire the gaming giant in January 2022. Activision Blizzard publishes multiple major esports titles including Overwatch and Call of Duty, and runs multi-million dollar franchised leagues for those titles.
The acquisition has already been approved in some jurisdictions, such as Brazil and Saudi Arabia, but it has faced obstacles in others. Most notably, the US Federal Trade Commission (FTC) filed a complaint to block the merger in December 2022. The European Union is set to issue a decision on the deal by April 11th.
The CMA’s five-month investigation raised concerns about cloud and console gaming in particular, as the acquisition would bolster Microsoft’s position in both sectors, particularly by weakening the rivalry between Xbox and PlayStation.
“The CMA provisionally found that buying one of the world’s most important game publishers would reinforce this strong position and substantially reduce the competition that Microsoft would otherwise face in the cloud gaming market in the UK,” a press release issued by the government department states.
“This could alter the future of gaming, potentially harming UK gamers, particularly those who cannot afford or do not want to buy an expensive gaming console or gaming PC.”
It is not yet clear what the implications of Microsoft’s acquisition of Activision Blizzard would be for its esports properties.
Microsoft announced the $68.7bn acquisition — the largest in gaming and esports history — at the height of a difficult period for the publisher, which has been hit with several lawsuits alleging sexual harassment, discrimination and a pervasive toxic workplace culture at the company.
Activision Blizzard’s beleaguered Overwatch League saw a sponsorship exodus in light of those sexual harassment lawsuits. Some analysts saw an acquisition by Microsoft as vital to turning fortunes for the League, which unhappy franchise owners have also reportedly started legal action amid missed revenue promises and high operating costs.
Martin Coleman, Chair of an independent panel of experts conducting the investigation, said: “Our job is to make sure that UK gamers are not caught in the crossfire of global deals that, over time, could damage competition and result in higher prices, fewer choices, or less innovation. We have provisionally found that this may be the case here.
“We have also today sent the companies an explanation of how our concerns might be resolved, inviting their views and any alternative proposals they wish to submit.”
The CMA is currently welcoming responses to its provisional findings by March 1st, and has a deadline of February 22nd for possible remedies to addressing the CMAs concerns. These will then be considered ahead of the CMA’s final report, which is due by April 26th. Information about how CMA’s investigation works can be found here.