UK’s CMA Preliminary Ruling Opposes Activision Blizzard Acquisition

The United Kingdom’s Competition and Markets Authority (CMA) issued a preliminary ruling opposing Microsoft’s proposed $69 billion acquisition of Activision Blizzard. The regulatory body concluded that the merger could lead to diminished competition, higher consumer prices, reduced innovation, and fewer choices within the UK gaming market. The investigation, which utilized evidence from stakeholders including Microsoft, Activision Blizzard, and Sony, focused on the potential for Microsoft to leverage its existing market dominance to restrict access to key titles.

A central concern identified by the CMA is the potential for Microsoft to make popular franchises, specifically Call of Duty, exclusive to its own ecosystem. The agency noted that Microsoft already controls an estimated 60% to 70% of the global cloud gaming market, supported by its ownership of the Xbox platform, the Windows operating system, and the Azure cloud infrastructure. The regulator argued that integrating Activision Blizzard’s portfolio would provide a significant competitive advantage that could tip the balance of console competition in Microsoft’s favor.

To address these concerns, the CMA proposed potential remedies, including the divestiture of the business unit responsible for the Call of Duty franchise. The agency invited feedback from interested parties on its provisional findings and proposed remedies through early 2023, with a final report scheduled for release on April 26. This regulatory intervention highlights the ongoing scrutiny of large-scale consolidation within the global video game industry and the specific focus on maintaining competitive parity in cloud gaming and console markets.