UK regulator publishes feedback on preliminary investigation into Microsoft’s acquisition of Activision Blizzard

Last month, the UK’s Competition and Markets Authority (CMA) released preliminary findings on Microsoft’s acquisition of Activision Blizzard, suggesting that the takeover could hinder competition in the gaming market, leading to increased prices, reduced choice and innovation, and potentially harming British gamers by weakening crucial competition between Xbox and PlayStation consoles.

Recently, the CMA disclosed feedback from nine companies, including Sony, Microsoft, and Activision Blizzard, regarding its preliminary findings. Of the seven companies apart from Microsoft and Activision Blizzard, only one explicitly opposed the deal, and unsurprisingly, it was Sony.

In its response, Sony reiterated its position, emphasizing the importance of the “Call of Duty” franchise and asserting that the transaction would harm the industry. Preventing the colossal deal between Microsoft and Activision Blizzard could forestall such a situation. Sony’s ultimate conclusion was, Microsoft’s prior acquisitions and strategic intent demonstrate a motivation to eliminate redemption rights. This would inflict irreparable damage on the console and cloud gaming industries, harming players and competition. The way to prevent this harm is to block the transaction.

In contrast, 4J Studios was more candid in its response to the CMA, contending that companies like Microsoft inevitably need to secure more resources and talent to justify substantial investments in major hardware platforms like Xbox and that the deal is more a natural evolution of the industry. However, some scoffed at 4J Studios’ stance, considering it a small studio with business ties to Microsoft, as it undertook the development of the console version of “Minecraft.”

In addition to Sony, Microsoft, Activision Blizzard, and 4J Studios, the remaining five companies responded anonymously. The CMA is currently conducting a second-phase investigation into the acquisition and will reach a final conclusion on the transaction by April 26th.