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UK Competition Watchdog Moves To Second Phase Of Microsoft Activision Deal Investigation

The Competition and Markets Authority finds “a realistic prospect of a substantial lessening of competition”

The UK’s Competition and Markets Authority (CMA) has proceeded to the second phase of its investigation into the impact of Microsoft buying Activision Blizzard.

The first phase of the body’s inquiries was detailed in a report released Thursday, September 1st, which said that there was “a realistic prospect of a substantial lessening of competition” within the video games space as a result of the acquisition being completed. This initial investigation was announced in July

As a result, a second and deeper investigation will take place unless Microsoft and Activision Blizzard can do something to address the CMA’s concerns over competition being harmed.

Withholding or degrading

The organisation reckons that there are two issues with the deal. The first is that Microsoft could be “withholding or degrading” about Activision Blizzard’s content, meaning that there’s a worry it will be exclusive to the Xbox platforms. The other issue is that Microsoft could use Activision Blizzard’s content to “raise barriers to entry and foreclose rivals in cloud gaming services.”

These are both concerns that have been raised within the industry already. Microsoft and Activision Blizzard have until September 8th to show the CMA that the deal won’t impact competition within the market. If this isn’t done, a second phase of the investigation will take place.

“We’re ready to work with the CMA on next steps and address any of its concerns,” Microsoft president and vice chair Brad Smith said. “Sony, as the industry leader, says it is worried about Call of Duty, but we’ve said we are committed to making the same game available on the same day on both Xbox and PlayStation. We want people to have more access to games, not less.”

Continue to fully cooperate

In a letter to shareholders on its website, Activision Blizzard CEO Robert Kotick added: “This week we heard from the United Kingdom, where we have more employees than anywhere except North America. We have entered the second phase of our review there, and we will continue to fully cooperate with the regulators there, and everywhere approvals are required.

“As our industry continues to see numerous companies investing aggressively in gaming, including many of the world’s largest technology and media companies, government regulators are taking appropriate and deliberate steps to better understand our industry and the growing competition from around the world.”

In January of this year, Microsoft announced its intention to buy Activision Blizzard for a record-breaking $68.7 billion. The deal is being investigated around the world and so far has been given the thumbs up only in Saudi Arabia.

In the United States, the acquisition is being looked into by Federal Trade Commission, which tends to be stricter than the other government body that can handle these investigations, the Department of Justice.

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