UK Plans a 'More In-Depth Phase 2 Investigation' Into Microsoft's Activision Blizzard Acquisition - News
by William D'Angelo , posted on 01 September 2022 / 5,519 Views
The Competition and Markets Authority (CMA) in the UK has released a statement following its initial investigation into Microsoft's proposed acquisition of Activision Blizzard following feedback from third parties that have an interest in the deal.
The CMA has concerns as the acquisition would give Microsoft control over some of the most popular games in the industry like Call of Duty and World of Warcraft.
"Following our Phase 1 investigation, we are concerned that Microsoft could use its control over popular games like Call of Duty and World of Warcraft post-merger to harm rivals, including recent and future rivals in multi-game subscription services and cloud gaming," said the senior director of mergers at the CMA Sorcha O’Carroll.
"If our current concerns are not addressed, we plan to explore this deal in an in-depth Phase 2 investigation to reach a decision that works in the interests of UK gamers and businesses."
The CMA have given Microsoft and Activision Blizzard until September 8 to respond to the concerns and that if the responses are not received by then it will do a Phase 2 investigation. In this case wit will appoint an independent panel to take a closer look at the deal.
The CMA in its summary said it is "concerned that if Microsoft buys Activision Blizzard it could harm rivals, including recent and future entrants into gaming, by refusing them access to Activision Blizzard games or providing access on much worse terms.
"The CMA has also received evidence about the potential impact of combining Activision Blizzard with Microsoft’s broader ecosystem. Microsoft already has a leading gaming console (Xbox), a leading cloud platform (Azure), and the leading PC operating system (Windows OS), all of which could be important to its success in cloud gaming.
"The CMA is concerned that Microsoft could leverage Activision Blizzard’s games together with Microsoft’s strength across console, cloud, and PC operating systems to damage competition in the nascent market for cloud gaming services."
Microsoft president and vice chair Brad Smith in a response to the concerns by the CMA said, "We’re ready to work with the CMA on next steps and address any of its concerns. 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."
Microsoft Gaming CEO Phil Spencer in a recent interview said, "I feel good about the progress that we've been making" in regards to the acquisition. "But I go into the process supportive of people who maybe aren't as close to the gaming industry asking good, hard questions about 'what is our intent? What does this mean? If you play it out over five years, is this constricting a market? Is it growing a market?'"
He added, "I've never done a 70 billion-dollar deal, so I don't know what my confidence means. I will say the discussions we've been having seem positive."
Sony previously claimed to Brazil's regulatory body the Activision Blizzard acquisition is anti-competitive as it could influence people to switch from PlayStation to Xbox and said the Call of Duty series is on its own level of popularity and it is has been the "overwhelmingly the best-selling game" for its genre.
Microsoft says that Sony does not want to see Call of Duty available on Xbox Game Pass on day one as Sony doesn't want to compete with the service and that "Sony is limited to commenting on Call of Duty's brand strength and loyalty and engagement. However, claiming that Call of Duty has a loyal following is a premise from which the conclusion that the game is a 'category of games in itself; does not follow.
"The PlayStation itself has a foundation established by players loyal to the brand. This finding, however, does not lead to the conclusion that the PlayStation – or any branded product with loyal consumers – is a separate market from all other consoles. Extrapolating from such a finding, the extreme conclusion that Call of Duty is a 'game category in itself' is simply unjustifiable under any quantitative or qualitative analysis."
Microsoft showed data that only two Activision Blizzard games ranked in the top 20 best-selling console games of 2021 that included notable franchises from third-party developers and exclusives from PlayStation and Nintendo.
Saudi Arabia's competition authority last month became the first place to approve Microsoft's acquisition of Activision Blizzard. The Communications Workers of America, the largest communications and media labor union in the United States, sent a letter to the FTC in June in support of the proposed acquisition.
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can contact the author on Twitter @TrunksWD.
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Like always, here is a good watch to understand this better: https://www.youtube.com/watch?v=Yy-yb_u9HK4&ab_channel=HoegLaw
And not come up with a lot non-sense and assumptions :) Basically, this is normal and expected....
Not sure why any gamer would want to see these trillion $ mega corporations come in and buy whole publishers. We all have our preferences and I get there are xbox fans that want microsoft to buy everything, but anyone with half a brain should see how disruptive this could be for the industry.
Xbox last place console = leading gaming console; hurt consumers by offering cheap gamepass options.
This will take forever.
Lmao now mods delete comments
Brad Sams noted that Microsoft is inviting mobile developers to make mobile-specific content to distribute through Game Pass and xCloud to mobile devices. This could be part of an argument to suggest that Game Pass can grow to become an alternative game distribution system to the App Store and to Google Play. Therefore, Microsoft will argue that they are increasing overall competition by breaking down two of the most protected "walled gardens" going.
Rick Hoeg (M&A lawyer on YouTube who produces excellent content) is saying this was expected and doesn’t materially change anything in the short term. The only curious part (in his opinion) is that the CMA document seems overly concerned with protecting Sony’s (and specifically Sony’s, as they were called out by name) current marketshare and user base, which from a standpoint of trying to protect competition seems like the exact opposite argument you would want to be making.
ah :) Posted at the same time with the link.
Seems like they believe MS used similar wording in Bethesda now for ABK and when the deal closed it wasn't exactly what was expected by the governing bodies.
I'm not sure how you would know if they used similar language or not. The public never heard what was said to the governing bodies in any great detail. Xbox was never this forthcoming about Bethesda and where those titles would be beside the ones they honored contracts with Sony.
I'm talking about what they said publicly.
On Bethesda they said they weren't purchasing Bethesda to remove content from other platforms, then for months said they couldn't give more details or repeat the same thing, and as soon as the deal closed they said future games would be exclusive. Similar wording is used on saying current games of ABK will stay where they are and contracts will be honored and "we intend to keep CoD multiplat".... deal is closed good chance future CoD not under contract will be exclusives.
MS is being very explicit about keeping CoD multiplat. This is similar to what they said about Minecraft. Look at Minecraft now. They never said anything nearly as specific as, "Keeping CoD multiplat" with Bethesda, except for specific games already under contract. Notice the pattern. Don't take vague statements like it's proof of anything and compare it to something like what is being said here.
"we INTEND" and "for several years" isn't anywhere similar to "we promise" or "we commit" and "for as long as we do the IP".
Now compare to Bungie statement that is basically "all Bungie games present and future will be multiplatform", cut clear and abrangent.
It also doesn't mean they will take CoD off Playstation at some point. MS isn't going to have an agreement that never expires because that backs them into a corner. They will reassess the deal again in the future. Even if new CoD games don't release on PS after this gen, Sony really will be okay. Warzone will be on Playstation at the very least which is what most people play anyways. It's weird being worried for the number 1 gaming company. Xbox might actually make things competitive which is a good thing for us consumers.
Haven't said they will immediately remove nor that Sony will be endangered by it, but you gone that way to avoid recognizing that they aren't as clear cut as Bungie deal was and that what they did with Bethesda is what causes UK team to want to look further.
That' wasn't even your original post, but if it makes you feel better, sure Bungie is clearer cut. Remember though, Bungie pretty much set the terms of the agreement because they wanted to stay multiplatform. I'm sure Sony would have Bungie make their titles exclusive if they had their way. MS never said Bethesda games would stay Multiiplat when the deal was going through. I don't know why you keep using this as your argument.
Yes sure, Sony is paying the 3B but Bungie held all the cards, sure sure. And "we won't take away from other platforms" certainly doesn't mean keeping the game multiplatform.
You really think Sony would choose for Bungie to always stay multiplat? Staying multiplat was a Bungie decision. What Sony gets out of it is the publishing right for future games, and Bungie helps them with their other live service games as well.
That is a very thin argument for Bethesda. You yourself was making a point about how explicit Bungies deal was. Does that sound explicit to you? No, it's vague and can be taken in several directions.
Sony is putting their own games on PC after a few years, and in a negotiation everything is negotiable. Values could change, some people on Bungie could leave, among a lot of variables. But you and some other make it seem like Bungie was the one spearheading the negotiation and with all power in its hand.
What thin argument is there for Bethesda? MS said they weren't buying to take from other platforms, play anywhere, etc, etc, etc when they announced the deal. Few weeks later it was no comment to share until the deal was closed (when asked about specifics on exclusivity). Deal is closed and they shortly inform that StarField and Elder Scroll would be exclusive.
Are you saying Bungie announcement wasn't explicity? Because if you are saying that Bethesda and ABK deal aren't explicit then you are agreeing with me, and it not being explicit is why UK is looking further (case in point, how MS done with Bethesda).
Considering how much Sony goes out of their way to keep stuff off Xbox and Nintendo, I do not see them spearheading the choice to keep all Bungie games multiplat. You know releasing a game on PS/PC only is not the same. They both got something out of it. Bungie stays multiplat and Sony gets to publish and assistance from Bungie. I never said Bungie had all the power, but staying multiplat was clearly one of their terms in the agreement. I'm sure something similar happened when Mojang was acquire by MS.
They never said a certain game, franchise, or studio would stay multiplatform, besides games with agreements ie Deathloop. Nothing was specific, unlike with the Mojang or Bungie acquisitions.
All I said about ABK was that they would keep CoD multiplat, at least until the gen is over, if not indefinitely.
This is my last reply because we are going in circles.
Microsoft's market cap is ten times that of Disney, and they have their fingers in a lot more pies than Disney as it is. Yes, it's going to get harder scrutiny.
And it isn't like Disney was using the money from the park tickets to buy Movie Distributors to a division that never generated 10% of the profit that they are using on a single purchase =P
Although the lack of success of Xbox is the excuse fans use to justify being good for MS to put those billions to reach a size similar to Sony.
I would bet they loved when all their effort to achieve something in youth was nullified by some playboy paying for it with father money while pretending to be their own effort.
Any. A person that is full of money that they didn't earned themselves, don't know what to do with it except expend it to validate themselves.
You can't say that, you must believe in Phill.
What part of this specific deal have they flipped flopped?
The only difference between Phil Spencer and Adam Orth is that Phil knows when to keep his mouth shut.
I haven't heard of the guy before. You made my day. He is more obnoxious than Don Mattrick.
I agree. I like Phil at times, but I never know who the real Phil Spencer is. He just seems very fake. I’ve heard people say he talks out of both sides of his mouth, and I’d have to agree. Just one example is how he’s talked so much about wanting as many people to play games as possible, but then they do things like buy Bethesda and scrap the mostly finished Starfield PlayStation version to make it exclusive to Xbox. And this clearly isn’t the last time they’ll be doing things like this.
His deal to keep CoD on PlayStation for a few more years has less to do with generosity and more to do with Microsoft trying to avoid the heat as regulators scrutinize this deal. Phil does talk out of both sides of his mouth. Plus, every time he farts, it gets reported on.
Of course it is, no doubt.
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