UK Paves The Way For Microsoft To Buy Activision Blizzard But A Key Hurdle Remains

A key regulator has said it provisionally no longer believes Microsoft’s proposed deal to buy Activision Blizzard would result in a lessening of competition in the console space, paving the way for the purchase to go through.

The UK’s Competition and Markets Authority said on Friday that it has narrowed the scope of its concerns about the deal. Importantly, though, the deal is not complete, and the CMA still has concerns about Microsoft’s bid to buy Activision Blizzard in the area of cloud gaming.

The CMA said in a news release that it received a “significant amount of new evidence,” and based upon this–along with the careful consideration of a “wide range” of other information–the group now believes, provisionally, that Microsoft’s deal shouldn’t be all that problematic in the UK.

“The CMA inquiry group has updated its provisional findings and reached the provisional conclusion that, overall, the transaction will not result in a substantial lessening of competition in relation to console gaming in the UK,” the group said.

According to the CMA, the “most significant” new evidence that it found pertained to the belief held by some that Microsoft could, or would, make Call of Duty exclusive to Xbox.

“While the CMA’s original analysis indicated that this strategy would be profitable under most scenarios, new data (which provides better insight into the actual purchasing behaviour of CoD gamers) indicates that this strategy would be significantly loss-making under any plausible scenario,” the CMA said. “On this basis, the updated analysis now shows that it would not be commercially beneficial to Microsoft to make CoD exclusive to Xbox following the deal, but that Microsoft will instead still have the incentive to continue to make the game available on PlayStation.”

Very importantly, the new CMA statement pertains only to competition concerns in the console market, not to the cloud gaming market. The CMA said it continues to “carefully consider” the responses it has received in this department. The final report is due by April 26, 2023.

CMA investigator Martin Coleman said, “Provisional findings are a key aspect of the merger process and are explicitly designed to give the businesses involved, and any interested third parties, the chance to respond with new evidence before we make a final decision.”

Coleman added: Having considered the additional evidence provided, we have now provisionally concluded that the merger will not result in a substantial lessening of competition in console gaming services because the cost to Microsoft of withholding Call of Duty from PlayStation would outweigh any gains from taking such action. Our provisional view that this deal raises concerns in the cloud gaming market is not affected by today’s announcement. Our investigation remains on course for completion by the end of April.”

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