Wed, February 8, 2023
LONDON (AP) — Microsoft’s stalled $68.7 billion deal to buy video game company Activision Blizzard has hit a fresh hurdle in the United Kingdom, where the antitrust watchdog said Wednesday that it will stifle competition and hurt gamers.
Britain’s Competition and Markets Authority said its in-depth investigation found that the deal could strengthen Microsoft's position in the growing cloud gaming market, “harming U.K. gamers who cannot afford expensive consoles.”
The blockbuster deal also could hurt British gamers by “weakening the important rivalry” between Microsoft's Xbox console and Sony's rival PlayStation machines, the watchdog said in a provisional report.
The all-cash deal, which is set to be the largest in the history of the tech industry, is facing opposition from Sony and pushback from regulators in the U.S. and Europe because it would give Microsoft control of popular game franchises such as Call of Duty, World of Warcraft and Candy Crush.
Microsoft's deputy general counsel, Rima Alaily, said the company is “committed to offering effective and easily enforceable solutions that address the CMA’s concerns.”
The U.K. antitrust investigation is now set to drag on for a few more months. The regulator said it will now seek feedback, including possible options to address its competition concerns, from interested parties for its final report due April 26.
The move dashes Microsoft's hopes that a speedy favorable outcome could help it resolve a lawsuit brought by the U.S. Federal Trade Commission.
The FTC has sought to block the deal, arguing that the merger could violate antitrust laws by suppressing competitors to the Xbox game console and its growing game subscription business.
Microsoft told the FTC’s administrative judge in January that it was working to resolve the U.K. investigation, as well as a separate probe in the European Union, and hoped to bring back proposed remedies to U.S. regulators.
The Activision Blizzard deal is one of several regulatory hassles for Microsoft in Europe, amid expanded scrutiny for Big Tech companies on both sides of the Atlantic over worries that they have become too dominant.
The Associated Press
Britain says Microsoft's 'Call of Duty' deal could harm gamers
Paul Sandle
Wed, February 8, 2023
LONDON (Reuters) - Britain's antitrust regulator said Microsoft's $69-billion purchase of "Call of Duty" maker Activision Blizzard could harm gamers by weakening the rivalry between Xbox and Sony's PlayStation.
The Competition and Markets Authority (CMA) said the deal could result in higher prices, fewer choices and less innovation for millions of gamers, as well as stifling competition in the growing cloud gaming market.
It said Activision's flagship "Call of Duty" franchise was important in driving competition between consoles, and Microsoft could benefit by making the game exclusive to Xbox, or only available on PlayStation under materially worse conditions.
The mega deal is being scrutinized in the United Sates and Europe as well as in Britain, where the CMA showed its willingness to take-on big tech in 2021 when it blocked Facebook-owner Meta's acquisition of Giphy.
In December, the United States moved to block the deal, citing Microsoft's record of hoarding valuable gaming content. The Federal Trade Commission has set a hearing before a judge for August this year.
The CMA investigation's chair Martin Coleman said his job was to make sure that British gamers were not caught in the crossfire of global deals that could damage competition and result in higher prices, fewer choices, or less innovation.
"We have provisionally found that this may be the case here," he said.
Microsoft, which has pledged to keep "Call of Duty" on PlayStation, said it would address the CMA's concerns.
"Our commitment to grant long-term 100% equal access to ' Call of Duty' to Sony, Nintendo, Steam and others preserves the deal's benefits to gamers and developers and increases competition in the market," Corporate Vice President and Deputy General Counsel Rima Alaily said.
The company stressed that equal meant parity on content, pricing, features, quality and playability for 10 years.
Activision Blizzard said the CMA's findings were provisional and both parties had a chance to respond before it issues a final report by April 26.
"We hope between now and April we will be able to help the CMA better understand our industry to ensure they can achieve their stated mandate to promote an environment where people can be confident they are getting great choices and fair deals, (and) where competitive, fair-dealing business can innovate and thrive," a spokesperson said.
(Reporting by Paul Sandle and Aby Jose Koilparambil; editing by Michael Holden and Bernadette Baum)
Paul Sandle
Wed, February 8, 2023
LONDON (Reuters) - Britain's antitrust regulator said Microsoft's $69-billion purchase of "Call of Duty" maker Activision Blizzard could harm gamers by weakening the rivalry between Xbox and Sony's PlayStation.
The Competition and Markets Authority (CMA) said the deal could result in higher prices, fewer choices and less innovation for millions of gamers, as well as stifling competition in the growing cloud gaming market.
It said Activision's flagship "Call of Duty" franchise was important in driving competition between consoles, and Microsoft could benefit by making the game exclusive to Xbox, or only available on PlayStation under materially worse conditions.
The mega deal is being scrutinized in the United Sates and Europe as well as in Britain, where the CMA showed its willingness to take-on big tech in 2021 when it blocked Facebook-owner Meta's acquisition of Giphy.
In December, the United States moved to block the deal, citing Microsoft's record of hoarding valuable gaming content. The Federal Trade Commission has set a hearing before a judge for August this year.
The CMA investigation's chair Martin Coleman said his job was to make sure that British gamers were not caught in the crossfire of global deals that could damage competition and result in higher prices, fewer choices, or less innovation.
"We have provisionally found that this may be the case here," he said.
Microsoft, which has pledged to keep "Call of Duty" on PlayStation, said it would address the CMA's concerns.
"Our commitment to grant long-term 100% equal access to ' Call of Duty' to Sony, Nintendo, Steam and others preserves the deal's benefits to gamers and developers and increases competition in the market," Corporate Vice President and Deputy General Counsel Rima Alaily said.
The company stressed that equal meant parity on content, pricing, features, quality and playability for 10 years.
Activision Blizzard said the CMA's findings were provisional and both parties had a chance to respond before it issues a final report by April 26.
"We hope between now and April we will be able to help the CMA better understand our industry to ensure they can achieve their stated mandate to promote an environment where people can be confident they are getting great choices and fair deals, (and) where competitive, fair-dealing business can innovate and thrive," a spokesperson said.
(Reporting by Paul Sandle and Aby Jose Koilparambil; editing by Michael Holden and Bernadette Baum)
Microsoft’s Activision Blizzard acquisition will harm UK gamers, says watchdog
Mark Sweney and Dan Milmo
Mark Sweney and Dan Milmo
THE GUARDIAN
Wed, 8 February 2023
Photograph: Dado Ruvić/Reuters
The UK’s competition regulator has ruled that Microsoft’s $68.7bn (£59.6bn) deal to buy Activision Blizzard, the video game publisher behind hits including Call of Duty, will result in higher prices and less competition for UK gamers.
The Competition and Markets Authority (CMA), which launched an in-depth investigation in September after raising a host of concerns about the biggest takeover in tech history, said the deal would weaken the global rivalry between Microsoft’s Xbox and Sony’s PlayStation consoles.
“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,” said Martin Coleman, the chair of the independent panel of experts conducting the investigation. “We have provisionally found that this may be the case here.”
Related: Hogwarts Legacy review – wizarding wish-fulfilment whose magic wears off
The CMA said possible remedies to address competition issues included selling or spinning off the business that makes Call of Duty, or the entire Activision arm of the combined Activision Blizzard.
However, the watchdog acknowledged that a spin-off into a standalone operation would mean the new business “may not have sufficient assets and resources to operate as an independent entity”.
While the CMA did not completely rule out measures short of a divestiture – for example a “behavioural remedy” such as an iron-clad licence to guarantee distribution of Call of Duty to Sony – it said a structural solution such as a partial sale, spin-off or completely blocking the deal was its preferred option.
“We are of the initial view that any behavioural remedy in this case is likely to present material effectiveness risks,” it said. “At this stage, the CMA considers that certain divestitures and/or prohibition are, in principle, feasible remedies in this case.”
The CMA said there was a risk under the deal that Microsoft could try to make Call of Duty, Activision’s flagship game and one of the most popular and profitable global franchises of all time, exclusively available to Xbox console owners.
Last year, Microsoft attempted to allay competition concerns, saying it would offer its rival Sony a 10-year licence to ensure the title stayed on its PlayStation consoles. However, after Microsoft’s $7.5bn acquisition of ZeniMax in 2020, the parent of studios behind games including The Elder Scrolls, Fallout and Doom, Microsoft moved to make some titles exclusive to its own devices.
“Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own consoles, or only available on PlayStation under materially worse conditions,” the CMA said. “This strategy, of buying gaming studios and making their content exclusive to Microsoft’s platforms, has been used by Microsoft following several previous acquisitions of games studios.”
The CMA said the end result could be that gamers would face “higher prices, reduced range, lower quality, and worse service in gaming consoles over time”.
Microsoft said it believed its 10-year guarantee to continue to offer Call of Duty to rivals on equal terms would be enough to allay competition concerns. “We are committed to offering effective and easily enforceable solutions that address the CMA’s concerns,” said Rima Alaily, the corporate vice-president and deputy general counsel at Microsoft.
The CMA’s ruling is of critical importance as it comes before the publication of official findings of investigations conducted by the European Commission and the US Federal Trade Commission, which in December launched legal action to block the deal.
Anne Witt, a professor of antitrust law at EDHEC Business School, said a full block by the CMA would force Microsoft to abandon the deal worldwide, unless it managed to get the decision overturned on appeal; while if Microsoft agreed to sell Call of Duty, such a move would probably satisfy other regulators.
“If the CMA gets Microsoft to sell Call of Duty it would probably meet the concerns of the FTC and the EU,” said Witt.
She added that regulators were less likely to accept behavioural remedies because they could be circumvented and were expensive to monitor. “If they don’t hammer out some kind of compromise and Microsoft does not accept the structural remedies, the CMA will have no other option than to prohibit the deal,” she said.
Activision Blizzard said it would attempt to change the CMA’s mind, “to ensure they can achieve their stated mandate to promote an environment where people can be confident they are getting great choices and fair deals”.
Microsoft’s all-cash offer for Activision Blizzard, which also publishes global hits such as World of Warcraft and Candy Crush, dwarfs its previous biggest deal, the $26bn takeover of LinkedIn in 2016.
The purchase would result in the Xbox maker becoming the world’s third-biggest gaming company by revenue behind China’s Tencent and Japan’s Sony.
Wed, 8 February 2023
Photograph: Dado Ruvić/Reuters
The UK’s competition regulator has ruled that Microsoft’s $68.7bn (£59.6bn) deal to buy Activision Blizzard, the video game publisher behind hits including Call of Duty, will result in higher prices and less competition for UK gamers.
The Competition and Markets Authority (CMA), which launched an in-depth investigation in September after raising a host of concerns about the biggest takeover in tech history, said the deal would weaken the global rivalry between Microsoft’s Xbox and Sony’s PlayStation consoles.
“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,” said Martin Coleman, the chair of the independent panel of experts conducting the investigation. “We have provisionally found that this may be the case here.”
Related: Hogwarts Legacy review – wizarding wish-fulfilment whose magic wears off
The CMA said possible remedies to address competition issues included selling or spinning off the business that makes Call of Duty, or the entire Activision arm of the combined Activision Blizzard.
However, the watchdog acknowledged that a spin-off into a standalone operation would mean the new business “may not have sufficient assets and resources to operate as an independent entity”.
While the CMA did not completely rule out measures short of a divestiture – for example a “behavioural remedy” such as an iron-clad licence to guarantee distribution of Call of Duty to Sony – it said a structural solution such as a partial sale, spin-off or completely blocking the deal was its preferred option.
“We are of the initial view that any behavioural remedy in this case is likely to present material effectiveness risks,” it said. “At this stage, the CMA considers that certain divestitures and/or prohibition are, in principle, feasible remedies in this case.”
The CMA said there was a risk under the deal that Microsoft could try to make Call of Duty, Activision’s flagship game and one of the most popular and profitable global franchises of all time, exclusively available to Xbox console owners.
Last year, Microsoft attempted to allay competition concerns, saying it would offer its rival Sony a 10-year licence to ensure the title stayed on its PlayStation consoles. However, after Microsoft’s $7.5bn acquisition of ZeniMax in 2020, the parent of studios behind games including The Elder Scrolls, Fallout and Doom, Microsoft moved to make some titles exclusive to its own devices.
“Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own consoles, or only available on PlayStation under materially worse conditions,” the CMA said. “This strategy, of buying gaming studios and making their content exclusive to Microsoft’s platforms, has been used by Microsoft following several previous acquisitions of games studios.”
The CMA said the end result could be that gamers would face “higher prices, reduced range, lower quality, and worse service in gaming consoles over time”.
Microsoft said it believed its 10-year guarantee to continue to offer Call of Duty to rivals on equal terms would be enough to allay competition concerns. “We are committed to offering effective and easily enforceable solutions that address the CMA’s concerns,” said Rima Alaily, the corporate vice-president and deputy general counsel at Microsoft.
The CMA’s ruling is of critical importance as it comes before the publication of official findings of investigations conducted by the European Commission and the US Federal Trade Commission, which in December launched legal action to block the deal.
Anne Witt, a professor of antitrust law at EDHEC Business School, said a full block by the CMA would force Microsoft to abandon the deal worldwide, unless it managed to get the decision overturned on appeal; while if Microsoft agreed to sell Call of Duty, such a move would probably satisfy other regulators.
“If the CMA gets Microsoft to sell Call of Duty it would probably meet the concerns of the FTC and the EU,” said Witt.
She added that regulators were less likely to accept behavioural remedies because they could be circumvented and were expensive to monitor. “If they don’t hammer out some kind of compromise and Microsoft does not accept the structural remedies, the CMA will have no other option than to prohibit the deal,” she said.
Activision Blizzard said it would attempt to change the CMA’s mind, “to ensure they can achieve their stated mandate to promote an environment where people can be confident they are getting great choices and fair deals”.
Microsoft’s all-cash offer for Activision Blizzard, which also publishes global hits such as World of Warcraft and Candy Crush, dwarfs its previous biggest deal, the $26bn takeover of LinkedIn in 2016.
The purchase would result in the Xbox maker becoming the world’s third-biggest gaming company by revenue behind China’s Tencent and Japan’s Sony.
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