Microsoft pleads for its Activision Blizzard deal as UK regulator signals in-depth review

Microsoft is publicly pleading for its Activision Blizzard deal to go ahead, just as the UK’s Competition and Markets Authority (CMA) has expressed concerns. Microsoft surprised the gaming world earlier this year with its plans to acquire Activision Blizzard in a $68.7 billion deal, by far the biggest ever in gaming. Now regulators are starting to take notice.

The UK’s CMA says it’s “concerned that Microsoft’s anticipated purchase of Activision Blizzard could substantially lessen competition in gaming consoles, multi-game subscription services, and cloud gaming services.” After an initial research phase, the CMA is signaling it will move to what it calls a phase 2 investigation if Microsoft isn’t able to answer its concerns within 5 working days.

A phase 2 investigation will see an independent panel examine Microsoft’s deal in more detail, and whether control over games like Call of Duty and World of Warcraft will harm rivals. In response, Microsoft Gaming CEO and head of Xbox, Phil Spencer, has spelled out Microsoft’s position in a blog post today.

Detailing Microsoft’s plans for gaming beyond just Xbox consoles, Spencer says the company will pursue a “principled path” in its approach to Xbox Game Pass and Call of Duty. Microsoft says it will make Overwatch, Diablo, and Call of Duty all available in Xbox Game Pass, but not prevent games like Call of Duty from being available on PlayStation.

“We’ve heard that this deal might take franchises like Call of Duty away from the places where people currently play them,” says Spencer. “That’s why, as we’ve said before, we are committed to making the same version of Call of Duty available on PlayStation on the same day the game launches elsewhere.”

Spencer likens Microsoft’s Activision Blizzard deal to the company’s $2.5 billion acquisition of Minecraft. “We know players benefit from this approach because we’ve done it with Minecraft, which continues to be available on multiple platforms and has expanded to even more since Mojang joined Microsoft in 2014,” says Spencer.

Image: Microsoft

Microsoft has also previously argued that not distributing games like Call of Duty at rival console stores “would simply not be profitable” for the company. In documents submitted to Brazil’s Administrative Council for Economic Defense (CADE) regulator, the company says a strategy of not distributing Activision Blizzard games on rival consoles would only be profitable if the games could attract a high number of players over to the Xbox ecosystem, resulting in revenue to compensate for losses from not selling these titles on rival consoles.

While the FTC, CMA, and the European Commission are still analyzing Microsoft’s Activision Blizzard deal, Saudi Arabia became the first country to approve the acquisition last month. I understand Microsoft still expects the deal to close fully in spring 2023, with many months ahead for competitors to voice concerns and Microsoft to argue for this giant acquisition. Spencer says he’s open and ready for the thorough reviews ahead:

“We will continue to engage with regulators with a spirit of transparency and openness as they review this acquisition. We respect and welcome the hard questions that are being asked. The gaming industry today is robust and dynamic. Industry leaders, including Tencent and Sony, continue to expand their deep and extensive libraries of games as well as other entertainment brands and franchises, which are enjoyed by players everywhere. We believe that a thorough review will show that the combination of Microsoft and Activision Blizzard will benefit the industry and players.”