Microsoft is now contending with increased pressure from U.K. regulators over its proposed acquisition of game publisher Activision Blizzard. On Thursday, the U.K.'s Competition and Markets Authority said it had "concerns" over the deal and would proceed with a second and extended period of regulatory review if Microsoft did not address the issues within five business days.
The tight time window all but ensures the so-called Phase 2 review will likely commence, which may involve deeper negotiations with the CMA over a period of many months that could prevent the deal from closing until well into 2023. Microsoft originally set a final deadline of June 2023 for the deal to pass, and the company is still working with both the U.S. Federal Trade Commission and the European Union's European Commission, the other two major regulatory bodies that could reasonably hold up or even doom the deal entirely.
"The Competition and Markets Authority (CMA) is concerned that Microsoft’s anticipated purchase of Activision Blizzard could substantially lessen competition in gaming consoles, multi-game subscription services, and cloud gaming services (game streaming)," the CMA wrote in a statement. The agency went on to say that it's concerned that if "Microsoft buys Activision Blizzard it could harm rivals, including recent and future entrants into gaming, by refusing them access to Activision Blizzard games or providing access on much worse terms."
Sorcha O’Carroll, the CMA's senior director of mergers, said in a statement, "We are concerned that Microsoft could use its control over popular games like Call of Duty and World of Warcraft post-merger to harm rivals, including recent and future rivals in multi-game subscription services and cloud gaming."
Microsoft has already released a blog post in response that outlines its position on the deal and tries to assuage concerns around Call of Duty and other thorny parts of the proposed acquisition. The post, penned by Microsoft Gaming CEO and Xbox chief Phil Spencer, echoes familiar statements company executives have made over the past nine months, including a commitment to keep Activision's Call of Duty franchise available to PlayStation players.
"We’ve heard that this deal might take franchises like Call of Duty away from the places where people currently play them. 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 said. "We will continue to enable people to play with each other across platforms and across devices. 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."
Spencer's post also goes to great lengths to outline exactly why Microsoft sees the Activision acquisition as a vital way to grow its consumer base beyond the console audience. "While we love consoles, we recognize that they are not the only way that people play games. Today, the largest and fastest growing segment of gaming is mobile platforms. To reach the billions of players where they are and no matter what device they play on, we need to embrace choice," Spencer wrote. "We are expanding choice in two ways: through the creation of Game Pass, which gives players a subscription option; and by bringing more games to mobile platforms, including through our cloud game streaming technology."
Spencer said the Activision deal includes not only big console and PC franchises like Diablo and Overwatch in addition to Call of Duty, but also mobile expertise in the form of Candy Crush maker King. Combined, the deal would allow Microsoft to grow its cloud gaming initiative to bring console games to smartphones and other screens while also developing more mobile-first titles to compete in the mobile gaming market. (Sony on Monday announced it had acquired its first mobile gaming studio to develop new PlayStation titles for smartphones.)
"This promises to open up mobile gaming, creating new distribution opportunities for game developers outside of mobile app stores while delivering compelling and immersive experiences for players by using the power of the cloud," Spencer said. "And we can extend the joy of playing to devices that people already own, including Smart TVs and laptops."
