Microsoft’s Xbox Activision deal might be delayed even further now after a UK watchdog has raised concerns over the acquisition and how it could affect the gaming industry. According to the report, should the concerns not be addressed in a timely manner, the buyout will be forced into a second investigation further delaying the merger of these two companies.
The UK competition regulatory inquiry has proposed that Microsoft’s acquisition of Activision Blizzard be expanded over competition concerns. The Competition and Markets Authority has confirmed that last month, it opened an investigation into the multi-billion dollar deal to determine whether or not it was a fair purchase. The authority now claims that even after Microsoft addressed some of the issues, there are still outstanding concerns surrounding the acquisition.
The biggest reason for concern surrounding the buyout is regarding Microsoft’s hold on some large gaming IPs. According to Sorcha O’Carrol, senior director of mergers at the CMA, there are concerns that Microsoft could use these IPs to control the industry. She says:
“Following our Phase 1 investigation, we are concerned that Microsoft could use its control over popular games like Call of Duty and World of Warcraft post-merger to harm rivals, including recent and future rivals in multi-game subscription services and cloud gaming.
If our current concerns are not addressed, we plan to explore this deal in an in-depth Phase 2 investigation to reach a decision that works in the interests of UK gamers and businesses.”
Microsoft now has until 8 September to submit proposals addressing these concerns and if the company fails to do so, the whole deal will be referred for further investigation which could delay the purchase and even deny it entirely. The CMA says that there are concerns that Microsoft’s acquisition of Activision Blizzard may harm the industry and its rivals.
“is concerned that if Microsoft buys Activision Blizzard it could harm rivals, including recent and future entrants into gaming, by refusing them access to Activision Blizzard games or providing access on much worse terms”.
The CMA has also received evidence about the potential impact of combining Activision Blizzard with Microsoft’s broader ecosystem. Microsoft already has a leading gaming console (Xbox), a leading cloud platform (Azure), and the leading PC operating system (Windows OS), all of which could be important to its success in cloud gaming.
The CMA is concerned that Microsoft could leverage Activision Blizzard’s games together with Microsoft’s strength across console, cloud, and PC operating systems to damage competition in the nascent market for cloud gaming services.”
While the CMA might have a few issues with this acquisition, Microsoft says they are ready to work with the firm to address possible problems. The company says:
“We’re ready to work with the CMA on next steps and address any of its concerns. Sony, as the industry leader, says it is worried about Call of Duty, but we’ve said we are committed to making the same game available on the same day on both Xbox and PlayStation. We want people to have more access to games, not less.”