Regulators hold back Microsoft's acquisition of Activision

Regulators hold back Microsoft’s acquisition of Activision

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Microsoft’s $75 billion acquisition of video game maker Activision Blizzard is under intense investigation in Brussels and the UK amid growing concerns that the deal is anti-competitive and will prevent rivals from access the hit game Call of Duty.

It comes as the UK Competition and Markets Authority is expected to launch a full investigation this week after Microsoft decided not to offer a solution at this stage, according to two people with knowledge of the situation.

Earlier this month, the CMA became the first global antitrust regulator to sound the alarm on the transaction, giving Microsoft five days to offer undertakings that would resolve its concerns or face a protracted ‘phase’ investigation. 2”.

The companies have already been in talks with regulators in Brussels since the deal was announced eight months ago, in what is known as the pre-notification phase – an indication of how rigorously officials will be during investigation.

Regulators and others involved in the deal expect a prolonged EU investigation once Microsoft formally files its case in Brussels in the coming weeks. People familiar with EU thinking say regulators will take their time reviewing the deal because of its size, the nature of the buyer and growing concerns from rivals, including Sony.

“It’s a big deal, a tough deal,” said a person in Brussels familiar with the deal. “This requires a thorough investigation.”

It comes after Sony last week accused Microsoft of misleading the gaming industry and regulators about its commitments to meet Call of Duty on PlayStation consoles. He said Microsoft only offered to continue publishing Activision’s hit game on PlayStation for a limited number of years.

The UK’s decision lays out the issues Microsoft will need to overcome to land its biggest deal yet. The US tech giant hopes to complete the deal by the end of June next year, but must first clear regulatory hurdles in countries from New Zealand to America.

Microsoft chose not to offer any remedy to the CMA at this stage because there was no obvious commitment the UK regulator would be likely to accept, according to people with knowledge of the situation.

The watchdog generally does not accept behavioral remedies, such as commitments to maintain access to a product or service, upon completion of a Phase 1 investigation, except in rare circumstances.

A competition attorney with knowledge of the case said it was “nearly impossible” for Microsoft to offer a solution that would prevent the probe from progressing to a full antitrust investigation.

The Activision deal comes at a time when regulators around the world fear they may not have been as hands-on as they should have been with respect to previous Big Tech deals.

The game’s rivals say they’re worried Microsoft is offering commitments it could easily “opt out of” and don’t last long. Sony and others want the commission to force Microsoft to offer guarantees that they will be able to access all games “on equal terms and in perpetuity.”

Microsoft said it would continue to do Call of Duty available on game consoles from other companies, such as PlayStation, rather than making it an exclusive title on Microsoft’s Xbox. Brad Smith, president and vice president of Microsoft, previously said “we want people to have more access to games, not less.”

The company may choose to formally engage with the CMA to ensure its rivals’ access to games during the second phase of the investigation, when an independent panel will analyze the deal in depth and consider potential solutions. to antitrust issues.

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