Is the deal dead? (pic: Microsoft)



The UK’s CMA has officially ruled the Microsoft Activision deal as ‘harmful to gamers’ but is offering an alternative solution.



As sick as we all are hearing about it, Microsoft’s efforts to finalise its acquisition of Activision Blizzard remains a vitally important question within the games industry.



Despite assurances that it would all go smoothly, Microsoft has faced significant pushback from both the US and UK regulators, with the former even filing a lawsuit to outright block the deal.



Now, the UK’s Competition and Markets Authority (CMA) has completed its second investigation and, as suspected , has concluded that the deal will stifle competition and negatively impact UK gamers.



The writing was already on the wall given the CMA’s initial concerns with the deal, which Microsoft has frequently fought back against, insisting that the deal will only benefit consumers.



However, the CMA remains unconvinced, believing the acquisition will lead to ‘higher prices, fewer choices, or less innovation.’



The possibility of Call Of Duty becoming exclusive to the Xbox platform is obviously among the key points, but the CMA is also wary of the same befalling Activision’s entire library.



It believes ‘Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own consoles (or only available on PlayStation under materially worse conditions).’



Microsoft has insisted that it won’t be making Call Of Duty an Xbox exclusive, and has offered new deals with Sony and Nintendo to keep the franchise multiplatform for at least 10 years.



In response to the CMA’s findings, Microsoft Corporate Vice President and Deputy General Counsel Rima Alaily quadrupled down on this stance, saying: ‘We are committed to offering effective and easily enforceable solutions that address the CMA’s concerns. Our commitment to grant long term 100% equal access to Call Of Duty to Sony, Nintendo, Steam and others preserves the deal’s benefits to gamers and developers and increases competition in the market.



‘When we say equal, we mean equal. 10 years of parity. On content. On pricing. On features. On quality. On playability.’



She even adds that the majority of the general public backs the deal, saying, ‘75% of respondents to the CMA‘s public consultation agree that this deal is good for competition in UK gaming.’



Call Of Duty: Modern Warfare 2 – Microsoft has always insisted it doesn’t plan on taking away Call Of Duty from PlayStation players (pic: Activision)



It’s worth pointing out, though, that Microsoft has only ever offered a 10-year deal, so there’s no guarantee that it’ll extend it once that deal expires.



The CMA is also aware that Microsoft already has an established strategy of buying studios to make their content exclusive. It doesn’t mention it by name, but this was what happened with Bethesda , with none of its future releases, including the upcoming Starfield, planned for any platforms other than Xbox and PC.



In addition, the CMA has concerns of Microsoft gaining too much of a foothold in the cloud gaming space by making Activision games exclusive to its cloud service.



‘Microsoft already accounts for an estimated 60-70% of global cloud gaming services and also has other important strengths in cloud gaming from owning Xbox, the leading PC operating system (Windows) and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming),’ it says .



‘The CMA provisionally found that buying one of the world’s most important game publishers would reinforce this strong position and substantially reduce the competition that Microsoft would otherwise face in the cloud gaming market in the UK.



‘This could alter the future of gaming, potentially harming UK gamers, particularly those who cannot afford or do not want to buy an expensive gaming console or gaming PC.’



Overwatch 2 – the buyout would also net Microsoft all of Blizzard’s games (pic: Blizzard)



So, that’s it then. Deal’s off, right? Not necessarily. The CMA has offered possible solutions for Microsoft to pursue, although the question is whether Microsoft will actually accept any of them.



The CMA suggests a ‘partial divestiture’ of Activision Blizzard, meaning Microsoft can still buy the company, but it can’t have Call Of Duty.



The CMA’s options are:




Divestiture of the business associated with Call Of Duty



Divestiture of the Activision segment of Activision Blizzard, Inc. (the Activision segment), which would include the business associated with Call Of Duty



Divestiture of the Activision segment and the Blizzard segment (the Blizzard segment) of Activision Blizzard, Inc., which would include the business associated with Call Of Duty and World Of Warcraft, among other titles




Considering Microsoft has claimed that it mainly wants Activision for its mobile gaming business , then this shouldn’t be a problem – except no one really believed them when they said that.



It may not even matter if the US’ Federal Trade Commission succeeds in its lawsuit, since Microsoft needs every regulator worldwide to approve the deal.



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One Stuart Smith, an intellectual property lawyer at specialist disputes firm Simkins, certainly believes the CMA has made the right call.



‘Microsoft wouldn’t be planning to spend $75bn to acquire Activision if it didn’t think there would be a material advantage in doing so,’ he says.



‘The CMA have rightly identified that commitments from Microsoft to keep Call Of Duty available on PlayStation for years to come are only part of the story, and that the prospect of Call Of Duty being available to play in the cloud only via Xbox cloud services could give Microsoft a competitive edge that Sony and other rivals might never catch up.’



This story may finally have an end depending on Microsoft’s response (pic: Activison)



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