“Following our Phase 1 investigation,” wrote Sorcha O’Carroll, senior director of mergers at the CMA, in the agency’s news release. “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.”
The U.S. Federal Trade Commission and regulatory bodies around the world have also been investigating how the deal could affect competition in their respective markets. Saudi Arabia’s General Authority for Competition was the first regulation agency to publicly declare its approval.
Microsoft has already amassed a staggeringly powerful gaming empire through its Xbox console series, its operating system Windows (the most popular operating system in the world, including on gaming PCs), buying up prominent game companies such as Bethesda and its subscription service Xbox Game Pass (which is continually bolstered by the company’s aforementioned acquisitions). With Activision Blizzard, Microsoft would gain control over a dozen more legendary gaming properties, including Call of Duty, Diablo and Candy Crush.
In August, Microsoft’s chief gaming rival Sony argued that Call of Duty is too powerful a brand to compete against, and so popular that the military shooter series should be considered its own genre. In its news release, the CMA cited Call of Duty as a property that could crush any of Microsoft’s potential competitors if the company decided to make it an Xbox exclusive after acquiring Activision Blizzard.
“As the market for multi-game subscription gaming services grows,” the CMA wrote in its summary. “Microsoft could use its control over [Activision Blizzard] content to foreclose rivals, including recent and future entrants into gaming as well as more established players such as Sony.”
The CMA requested that Microsoft and Activision Blizzard provide the CMA with a proposal on how to abide by section 73 of the Enterprise Act 2002, which guides fair trade policies in the U.K. If the companies don’t provide a satisfactory response, the CMA will shift its investigation into the deal into a second phase, to “evaluate whether it is more likely than not that a substantial lessening of competition will occur as a result of the merger,” according to the news release.
“We’re ready to work with the CMA on next steps and address any of its concerns,” wrote Brad Smith, president and vice chair of Microsoft, in a statement to The Washington Post. “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.”
Both regulators and gamers have expressed concern over the idea that Call of Duty, a gargantuan gaming property that has netted Activision Blizzard over $30 billion in the franchise’s lifetime, could become an Xbox exclusive if Microsoft gains control of Activision Blizzard. Microsoft has repeatedly assured regulators and gamers that it wouldn’t take Call of Duty exclusive and remove it from PlayStation. The company would risk a huge backlash from gamers and reduced profits on the Call of Duty franchise if the titles were to leave Sony’s platform. Regulators may ask for commitments as part of the merger terms, fearing a situation in which Microsoft might try to walk back its promises to keep Call of Duty on PlayStation.
To that end, Phil Spencer, CEO of Microsoft Gaming and head of Xbox, wrote that Microsoft will “continue to engage with regulators with a spirit of transparency and openness as they review this acquisition” in a Microsoft blog post Thursday, the same day that the CMA published its findings. Spencer reiterated his commitment from January to keeping Call of Duty on PlayStation and pointed out Tencent and Sony as other industry giants that have also made major acquisitions in the ongoing consolidation of the video game market.
“We believe that a thorough review will show that the combination of Microsoft and Activision Blizzard will benefit the industry and players,” Spencer wrote in the blog post. “For all the players and game developers out there, you remain at the center of everything we do, and we will continue to listen to your feedback and do everything we can to nurture this industry we all love.”
Bobby Kotick, CEO of Activision Blizzard, discussed the merger in a Thursday press release. Kotick said that he anticipates the deal will close in June 2023, and announced plans to host town halls to update employees on Activision Blizzard’s upcoming plans.
Shannon Liao contributed to this report.
