UK’s Competition and Markets Authority Changes Preliminary Findings on Microsoft – Activision Blizzard Deal

Key insights

5 takeaways

01
The UK’s Competition and Markets Authority (CMA) has updated its preliminary findings to conclude that Microsoft’s $69 billion acquisition of Activision Blizzard will not result in a substantial lessening of competition in the UK console gaming market.
02
The CMA’s revised position is based on new evidence suggesting that the cost to Microsoft of withholding the 'Call of Duty' franchise from PlayStation would outweigh any potential financial gains from such a strategy.
03
The CMA is scheduled to issue its final, binding ruling on the acquisition on Wednesday, April 26, 2023.
04
Despite the positive shift from the UK regulator, Microsoft still requires regulatory approval from the European Commission and the U.S. Federal Trade Commission to finalize the deal.
05
As of April 2023, the merger has already received regulatory approval in Japan, Saudi Arabia, Brazil, Serbia, and Chile.

Summary

The United Kingdom’s Competition and Markets Authority (CMA) shifted its stance on Microsoft’s proposed $69 billion acquisition of Activision Blizzard in April 2023, narrowing its scope of concerns regarding the deal. Following an extensive review of new evidence and consultations with interested parties, the regulatory body updated its preliminary findings to conclude that the merger would not result in a substantial lessening of competition within the UK console gaming market.

The inquiry group determined that the financial incentives for Microsoft to withhold major titles, such as Call of Duty, from rival platforms like PlayStation would be outweighed by the potential losses incurred from such a strategy. This pivot marked a significant development in the regulatory approval process, signaling a move toward a favorable final ruling. The CMA’s assessment focused specifically on the competitive dynamics of console gaming services, reflecting a shift from earlier, more restrictive provisional findings.

This regulatory update occurred within a broader international context, as the merger had already secured approvals from several other jurisdictions, including Japan, Saudi Arabia, Brazil, Serbia, and Chile. Despite the positive shift in the UK, the transaction remained subject to further scrutiny from the European Commission and the United States Federal Trade Commission. The CMA’s updated position served as a critical milestone in the global regulatory landscape for the gaming industry, highlighting the influence of new evidentiary submissions on antitrust investigations.