Microsoft responds to UK concerns about the Activision-Blizzard Xbox deal.
The UK competitions regulator has indicated its intention to investigate the transaction.
What you should know
Microsoft is in the process of purchasing Activision Blizzard, the maker of Call of Duty, for $72 billion.
The transaction must be approved by competition authorities in each country where these companies operate.
The UK competitions authority (the CMA) has indicated its intention to conduct a thorough investigation into the transaction.
Microsoft President Brad Smith issued a statement indicating the company’s intention to collaborate with the CMA to address any concerns.
Microsoft is currently in the process of making its largest acquisition to date, paying $72 billion for Activision-Blizzard, which is known for games such as World of Warcraft and Call of Duty. To complete the transaction, Microsoft must obtain the approval of every competition regulator in the countries in which Activision and Microsoft operate, including key markets such as the United States, the European Union, and the United Kingdom.
The UK Competitions and Markets Authority (CMA) issued a statement today declaring its intention to conduct a more thorough investigation into how the merger would affect competition in the UK console market.
“The CMA is concerned that having complete control over this powerful catalogue, particularly given Microsoft’s already strong position in gaming consoles, operating systems, and cloud infrastructure, may result in Microsoft harming consumers by impeding Sony’s — Microsoft’s closest gaming rival — ability to compete, as well as other existing rivals and potential new entrants.”
Microsoft president and vice chair Brad Smith responded with the following statement:
“We are prepared to collaborate with the CMA on next steps and to address any of its concerns.” Sony, as the industry leader, is concerned about Call of Duty, but we have stated that we are committed to making the same game available on both Xbox and PlayStation on the same day. We want people to have more access to games rather than fewer.”
Microsoft Gaming CEO Phil Spencer also wrote a lengthy blog post about the Activision-Blizzard merger, which you can read here (opens in new tab). Spencer reiterates the company’s intention to bring Activision’s games to more platforms while providing value to gamers through Xbox Game Pass in the post.
“We are broadening choice in two ways: by introducing Game Pass, which provides players with a subscription option, and by bringing more games to mobile platforms, including through our cloud game streaming technology.” Subscription services such as Game Pass make gaming more affordable and assist players from all over the world in discovering their next favourite game. Game Pass gives developers the ability to bring more games to more players, not fewer. We intend to make Activision Blizzard’s beloved library of games, such as Overwatch, Diablo, and Call of Duty, available in Game Pass, as well as to grow those gaming communities. We hope to expand Game Pass’s appeal to mobile phones and any connected device by providing even more value to players.”
The CMA’s findings, in my opinion, contradict Microsoft’s intentions for franchises such as Call of Duty and World of Warcraft, expressing a desire to bring them to additional platforms such as the Nintendo Switch. Given that, this step could simply be formalising Microsoft’s legal record with the UK authority, committing to bringing those games to more platforms, for example, to ensure that consumers have more options and better value — rather than less.
This merger appears to be the only real way for Activision investors to get a return on their investment in a company that has seen declining monthly active users in recent years. Activision has struggled to deliver innovation in some of its key franchises in the face of intense competition from other major service companies such as Tencent. Faced with repeated scandals involving its corporate culture, the company has also struggled to retain some of its developer talent. Activision is notorious for pioneering the $70 game trend, while charging a $10 fee to unlock resolution bumps on next-generation consoles. Including these titles in Xbox Game Pass for $10 per month would provide undeniable value to consumers, and I’m not sure how anyone could honestly argue against this point.
It may be a long time before the Microsoft and Activision deal is fully realised, but a deal of this magnitude was always going to be scrutinised — and rightly so — Microsoft simply needs to set in stone and prove what it has said all along, that this will result in more access to Activision Blizzard’s games and better value for consumers.