Microsoft tells UK’s CMA it will not offer any ‘undertakings’ to resolve regulator’s competition concerns, prompting start of indepth probe
Microsoft is not prepared to offer any concessions to the British competition regulator, over one of its biggest acquisitions to date.
It was back in January this year when Microsoft announced it would acquire Activision Blizzard for a staggering $68.7 billion.
Redmond said at the time that the largest ever gaming deal would accelerate the growth in Microsoft’s gaming business across mobile, PC, console and cloud, and would provide building blocks for the metaverse.
Microsoft of course already has a huge foothold in the gaming sector since 2001, thanks to its Xbox console and gaming brand.
The planned acquisition will give Microsoft access to an expansive library of classic games that span the Playstation, Xbox and PC platforms.
These games include Call Of Duty, World of Warcraft, Diablo, Candy Crush, and of course Starcraft.
Click to read Silicon UK’s Tales in Tech History piece about Microsoft’s gaming adventure.
The acquisition will also provide Microsoft with immediate access to the global eSports activities through Major League Gaming.
But the deal has provoked regulatory concerns around the world, and will also require approval in the United States as well as other major jurisdictions including the European Union and China.
In July the UK’s CMA said it would begin Phase 1 investigation over whether the deal would reduce competition in the UK.
After the Phase 1 investigation revealed regulatory concerns, the CMA earlier this month said it would begin a deeper Phase 2 investigation.
However the UK regulator gave the companies until 8 September to submit proposals to address the CMA’s concerns.
The CMA said it 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).”
Microsoft and Activision said at the time that they would continue to co-operate with the CMA.
But it seems that Microsoft informed the British regulator last week that it would not be offering any undertakings.
“The SLC Decision stated that the CMA would refer the Merger for a phase 2 investigation pursuant to section 33(1), and in accordance with section 34ZA(2) of the Act, if no undertakings for the purposes of section 73(2) of the Act were offered to the CMA by the end of this period (ie by 8 September 2022); if the Parties indicated before this deadline that they did not wish to offer such undertakings; or if the undertakings offered were not accepted,” the CMA stated.
“On 6 September 2022, Microsoft informed the CMA that it would not offer such undertakings to the CMA,” it added.
The UK’s antitrust watchdog thus announced on Thursday that it would begin an in-depth (Phase 2) probe into the acquisition.
Phase 2 investigations will allow an independent panel of experts to probe in more depth the risks identified at Phase 1.
A spokesperson for gaming rival Sony Interactive Entertainment welcomed the CMA’s move.
“We welcome today’s announcement by the UK Competition and Markets Authority (CMA) that it has opened a full-scale investigation into Microsoft’s proposed acquisition of Activision,” the spokesperson told Reuters.
“By giving Microsoft control of Activision games like Call of Duty, this deal would have major negative implications for gamers and the future of the gaming industry,” the Sony spokesperson said.
“We want to guarantee PlayStation gamers continue to have the highest quality gaming experience, and we appreciate the CMA’s focus on protecting gamers,” the spokesperson concluded.