Microsoft Activision Deal Would Have a “Negative Impact,” Say Three Third-Party Companies

As part of its investigation into the Microsoft Activision deal, the UK’s Competition and Markets Authority (CMA) asked six third party companies who would be affected by the merger about the potential impact of the acquisition. Three of the six stated that the merger “would have a negative impact on competition,” giving Microsoft the ability to foreclose rival gaming platforms, which would largely mean PlayStation.

Several third-party believe Microsoft already has a dominant portfolio

Between October 2022 and January 2023, in the course of its phase 2 investigation on the merger, the CMA questioned six competitors or potential competitors on how the deal would affect the gaming industry. While the identity of these third-parties have not been been disclosed, half of them expressed concern, in a newly released summary of the proceedings:

…[T]hree contended that the Merger would have a negative impact on competition, including by affording Microsoft the ability and incentive to foreclose potential and existing rivals in the console buy-to-play, console multi-game subscription and cloud gaming spaces.

Meanwhile, two of the six third parties did not express concerns about the deal and one stated that it was “too early to determine” the impact of the merger.

That said, one of the third parties stated that Microsoft’s recent behavior, including its acquisition of Bethesda, “demonstrates a strategy aimed at foreclosing rival gaming platforms, which would harm consumers.” Another third party believes that Microsoft already has a foothold in the multi-game subscription space (with Xbox Game Pass) and that the merger would only “entrench that position.”

Moreover, two of the six expressed concerns over adding Activision to Microsoft’s already dominant portfolio, which includes the Windows OS, Azure cloud platform, its console strength, and Xbox Game Pass.

Earlier in February, Microsoft provided a statement to PSLS that it does not believe the Activision Blizzard will be “blocked” in the UK and that it has a “strong” case for the acquisition. Call of Duty could be removed from the merger if Microsoft goes along with a suggestion made by the CMA.