Microsoft and Activision Blizzard merge might fail!

Microsoft and Activision Blizzard merge might fail!

10. February 2023 by Andrew Williams

Microsoft’s purchase of Activision Blizzard is no simple matter, as there are concerns about a monopoly position and antitrust regulators are therefore looking at the deal very closely. Now, British regulators have suggested that Activision Blizzard dissolve itself in order for the deal to be approved.

Bobby Kotick, the infamous CEO of Activision Blizzard, recently said that the United Kingdom would become “Death Valley” if it does not approve the sale of Activision Blizzard to Microsoft. The company is to be sold for for $69 billion.

British authorities interfere

Meanwhile, it is also known why he said that. The British Competition and Markets Authority announced almost simultaneously that the Microsoft deal would threaten competition in the games market. The authority suggested some solutions, for example, that Activision Blizzard would first have to sell the Call of Duty part of its business for the deal to go through. The authorities, released a statement, “Xbox and PlayStation currently compete closely, and access to key content, such as Call of Duty, is an important part of that competition. A reduction in this competition between Microsoft and Sony could result in all gamers experiencing higher prices, less choice, lower quality, and poorer service on game consoles over time.”

Regulators have been primarily considering what the acquisition could mean for the console and cloud gaming markets. In both cases, the market regulator said its investigation found that making Activision Blizzard games exclusive to its platforms would be “economically beneficial” to Microsoft, or at least “materially worse” for its competitors.

Proposed solutions from the bureaucrats

Microsoft has consistently stated that it would not change the status of Call of Duty on the PlayStation after the sale, and has even proposed signing a 10-year agreement to that effect. That agreement would also reportedly include the option for Sony to include Call of Duty in its own subscription service, PS Plus. However, the market regulator is not very enthusiastic about these options, which would require “monitoring and enforcement.” Instead, it is proposing “structural remedies” that get to the root of potentially anti-ompetitive mergers.

According to the agency, there are four options:

  • Divestment of Call of Duty-related business
  • Divestiture of the Activision segment of Activision Blizzard, Inc.
  • Divestment of the Activision segment and the Blizzard segment.
  • The deal is not going through

The CMA basically said it would prefer Microsoft buy only part of Activision Blizzard and not the entire publisher, like the Candy Crush part or the World of Warcraft part, but definitely not the Call of Duty part.

An Activision Blizzard spokesperson had this to say about the matter, “These are preliminary determinations, which means the CMA will put its concerns in writing and both parties will have the opportunity to respond. By April, we hope to help the CMA better understand our industry to ensure it can fulfill its stated mission of fostering an environment where people can be confident they will get great choice and fair deals, where competitive, fair-rading businesses can innovate and thrive, and where the entire UK economy can grow productively and sustainably. “The merger of the two is also under investigation by the EU, and in the U.S., the Federal Trade Commission has opened an antitrust case. In any case, console exclusivity seems to be the issue regulators are most concerned about. Where we go from here is not yet clear, but in the coming months we should get more information on how the super merger of the two companies will proceed.