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Activision Blizzard deal comes under microscope over new concerns

The Competition and Markets Authority has brought forward significant concerns over the proposed acquisition

Microsoft announced plans to acquire Activision Blizzard, a leader in game development and an interactive entertainment content publisher. The planned acquisition includes iconic franchises from the Activision, Blizzard and King studios like "Warcraft," "Diablo," "Overwatch," "Call of Duty" and "Candy Crush."

Today, the full text of the CMA (Competition and Markets Authority) decisions and concerns surrounding the Activision Blizzard deal has been released. The CMA handled issues such as antitrust rulings to ensure competition within markets. These rulings may prove to be significant in the progress or lack thereof of the deal, and may halt it in its tracks completely. The CMA are not the only authority examining the deal closely either, as the American FTC (Federal Trade Commission) comes closer to finishing its own examination of the deal.

One key aspect of the full text is its summarisation of the main concern behind the deal. “The CMA is concerned that having full control over this powerful catalogue, especially in light of Microsoft’s already strong position in gaming consoles, operating systems, and cloud infrastructure, could result in Microsoft harming consumers by impairing Sony’s—Microsoft’s closest gaming rival—ability to compete as well as that of other existing rivals and potential new entrants who could otherwise bring healthy competition through innovative multi-game subscriptions and cloud gaming services.”

Further Complications in the world of Activision Blizzard

In essence, the CMA’s concerns mirror what many have observed could happen as a result of the merger; Activision Blizzard ceasing to be an independent entity, and Microsoft consolidating an astounding catalogue and assets into their own company. It should be clarified that this is speculative, however the CMA clearly sees it as plausible enough to lay it out for legislative consideration.

The CMA points to Microsoft’s main competitor Sony as being one of the major companies which could be affected by the merger. As the CMA points out, the console gaming market has been dominated by three major players: Nintendo, Sony and Microsoft. Each of these possess an equally sizable market share, thus the further consolidation of one could make the possibility however remote of a new entrant all but impossible.

As for the mobile games division, acquiring Activision Blizzard would also give Microsoft a strong foothold in the handheld market. Activision Blizzard previously reported that their mobile games were more profitable than both console and PC combined. Whilst the CMA’s main concern lies in the competition of consoles they do discuss mobile, mainly in regard to King, the creators of Candy Crush likely because of their visibility as one of the three companies which make up Activision Blizzard King. Microsoft boss Phil Spencer has previously regarded the mobile division as key to the strength of the Activision Blizzard deal.

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