The Microsoft Acquisition Of Activision Blizzard Gets Major UK Pushback
from the regulators-mount-up! dept
Over a year ago, as the world was still largely reeling from the COVID-19 pandemic, we wrote about the trend beginning to form for consolidation in the video game industry. Industry consolidation is very typical in times of economic strife and it appears the video game industry is not immune to it. We heard about several studio and publisher acquisitions, not the least of which was Microsoft’s announced acquisition of Activision Blizzard for a whopping $68 billion. Almost immediately after that announcement was made, the public began making noise about what this would mean for several game franchises if they went exclusive to Xbox/PC, especially Call of Duty.
Once Microsoft responded with several vague and wishy-washy statements responding to that, the regulators jumped in and started expressing their own concerns. The FTC has filed suit to block the merger. The EU regulators are making similar noises over competition concerns. And then there’s the UK, where the Competition and Markets Authority (CMA) had already expressed concern before indicating that they were going to do phase 2 discovery on the acquisition. That has been completed and, hoo-boy, the CMA certainly has some ideas for how to alleviate its concerns.
The country’s Competition and Markets Authority announced provisional findings on Wednesday that the deal would threaten competition in the gaming market, and even suggested that in order to get the merger approved, Activision Blizzard would need to sell off the Call of Duty part of its business first.
“Xbox and PlayStation compete closely with each other at present and access to the most important content, like CoD, is an important part of that competition,” the CMA wrote in a press release. “Reducing this competition between Microsoft and Sony could result in all gamers seeing higher prices, reduced range, lower quality, and worse service in gaming consoles over time.”
It obviously goes into far more depth than just that, though. The CMA even offered other potentially remedies, which we’ll get into in a moment. The analysis and the concerns that come from it from the CMA are clear and detailed. Microsoft is going to be financially incentivized to take more AAA titles exclusive to its platforms, it has already waffled on the language in its public promises to not do that, and doing so would deprive the market of competition in the marketplace and raise costs for consumers.
Microsoft has said repeatedly that it would not change the status of Call of Duty on PlayStation after the sale, going so far as to suggest signing a 10-year agreement to that effect. That agreement would reportedly also include the option for Sony to put Call of Duty on its own subscription service, PS Plus. But the CMA isn’t very enthusiastic about these possibilities, which would require “monitoring and enforcement.” Instead, it proposes “structural remedies” that deal with potentially anti-competitive mergers at the source.
And that’s where the CMA offers up four possibilities to remedy its concerns. As you will see, Microsoft isn’t going to like any of them.
Divestiture of the business associated with Call of Duty
Divestiture of the Activision segment of Activision Blizzard, Inc.
Divestiture of the Activision segment and the Blizzard segment
Prohibition of the merger
Now, Microsoft has a chance to respond to these and work with the CMA to find alternative remedies. But the UK generally has far more teeth in the mouths of its regulators compared with America. The EU too tends to be more regulator-heavy. But even here in the States, the FTC is suing to block the acquisition.
None of this sounds particularly promising for Microsoft. And, frankly, it’s not hard to see the regulators’ point on all of this. Microsoft’s messaging has sucked, this acquisition is enormous, and the only thing to placate anyone worried about this stifling competition in the marketplace would be taking Microsoft’s latest promises at their word.
Filed Under: antitrust, competition, uk, video games
Companies: activision blizzard, microsoft
Comments on “The Microsoft Acquisition Of Activision Blizzard Gets Major UK Pushback”
Sony’s PS5s have been handily outselling the Xbox Series consoles almost 2:1, maintaining the same momentum as from last generation. The CMA saying that the 2 are currently competing closely? It rings hollow.
If you want to talk higher prices, Sony was the first big mover to make the push toward USD$70 games, triggering more developers and publishers to move that way and price up their own games. The Dead Space Remake and the new Zelda game being $70 each, for example.
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Thats a narrow market view. Due to Microsoft committing to simultaneous PC/Xbox releases, microsoft is moving games and more importantly Microtransactions, which is where the money is at. If the competition is market share, sure Sony wins if the market is ‘consoles’, but if the market is the pc/console market, Microsoft is at least in the running. And of course, we don’t need to worry about Call of Duty because the ABK merger is actually about getting a dominant position in the mobile market…
Tl:DR, MS doesn’t need to sell consoles to sell games, and its the games that bring in the revenue, not the console.
I still dislike how this acquisition has been framed about Xbox Vs PS hardware exclusives as though that’s a new thing. To be honest this merger won’t affect the hardware console market, there will continue to be the three major players with the possibility of the Steam Deck continuing to grow to add a fourth.
Where my concern lays and where competition will really be diminished is in the number of truly different publishers competing to create different and compelling games regardless of platform. That for me is what really drives competition and innovation in the video game industry. Microsoft has control of over 20 studios before this acquisition and that is a lot of IP, adding ABK will balloon the IP they control (and not small IP either) massively. COD going Xbox exclusive is a massive red herring in this debate compared to that and the fact it has been framed as the main issue is a big win for Microsoft and why I can see regulators giving the acquisition the go ahead after a few minor concessions, and why I don’t see an end to this kind of consolidation any time soon. I can see Square Enix and Ubisoft next on the agenda for a takeover given how they are both struggling right now.
CoD sale
Honestly, I would view the problem as the military industrial complex not wanting its major propaganda and recruitment tool in CoD to go exclusive, potentially excluding some gamers. The regulators pretty much spelled it out.
As someone who doesn’t play (and could not care less about) CoD, it is really that important to the console market? As in: is there are large number of console owners, say 20+%, that simply wont buy a console if it does not/will not have a CoD port?
I’m just waiting for the ISDS process to be threatened.
Nobody expects the Microsoft Acquisition!
I’m no Microsoft supporter in general, and maybe I’m biased because I have chosen them over Sony because I prefer the achievement system and I’ve grown out of buying every console and stick with the best fit. But, the idea that Sony can block a merger because of concerns over exclusives? Please…
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On a very personal level, I’d rather everyone start realizing that Microsoft, despite all the bad shit they’ve done in the past, would be doing the people who STILL work at Blizzard-Activision one hell of a good turn by freeing them from Bobby Kotick, known hater of the gaming industry and all around terrible person.
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XBox seems to be a very different ethic from the OS/Office sides of the business, and even they have been forced to change their tune over the years. From my vantage point, XBox completely changed their ideas in very positive ways after the disastrous One launch for the better, and Sony are way worse in almost every metric being claimed about them now.
I’ll agree that trying to make CoD platform exclusive would be bad, but I don’t see that it’s on the cards, and I don’t really see evidence that MS will do worse than letting Activision continue as they were. Certainly, if you’re going to complain about a company buying studios to restrict new IPs to be platform exclusives, that’s Sony’s playbook. I’d rather it be opened up than let Xbox lock things up, but I don’t see that the current deal does anything that Sony aren’t already do.
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“Sony’s already shitting on your lawn, so I don’t see why you’re complaining that I have my pants around my ankles.”
The Microsoft Acquisition Of Activision Blizzard Gets Major UK Pushback
Both Microsoft and Activision Blizzard are US companies. How does the UK have any say in this?
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Microsoft and Activision do lots of business in the UK and UK action could block Microsoft from the UK gaming market if they went ahead of the merger. Other jurisdictions would make note of that and could block them as well. So it’s in Microsoft’s best interest to get them onboard.
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Games are sold in other places, and they have a business presence in those places.
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Indeed. The fact is that thanks to the internet, governments no longer have any sort of economic control over what enters their country digitally. (As versus what enters physically.) Or have they forgotten that when one of their citizens wants a game that is published in America, said company no longer ships out a round piece of plastic in a cardboard box? The purchaser simply obtains the product via the internet, no hassle at all. (And here I’m not talking about piracy, I’m talking about a simple purchase with a credit/debit card.)
And just for grins…. Can you imagine just how complex the Firewall Rules would have to be in order to accomplish a blockade on an American company, and yet permit all other business transactions to cross its borders? It staggers the imagination.
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We will see domestic infrastructure being built by individual countries that will make Internet 2.0 and beyond possible.
Many of the failed models on a “global network” would actually prosper on a domestic or regional level. Being nimble is what keeps the innovation exciting.
Network architecture is getting easier and most of the components are commodity parts. Everything has gotten faster, making new infrastructure a low hurdle nowadays.
The digital looting with GPT will only accelerate it, knowing google and bing became irrelevant search tools many years ago and have only had ad-biased curation.
Its just like radio or TV going from 1 station to many likenin the 20th century. Or coleco and atari to what we have today. Technology is not standing still. It never has.
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Ha! The just need to do scary clown memes and deepfake videos reqding chatGPT results to SPAM that into oblivion. Its free marketing on every social platform.
There are a lot more in-game hacks occuring and it’ll be interesting to see if the recent league of legends hack causing in-game hacks to skyrocket.
Many games are played regionally for low pings, so it would be the same for a lot of it.
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Like this?
https://imgflip.com/i/7auuwh
That’s probably already happening on the Internet. They never waste a good meme.
Oh, sure, just divest COD. /headdesk
This would probably be good for Act/Blizz future but the FTC is probably right. Sadly it isn’t weighting in in other consolidation movements that need attention as well.