What you need to know
- Microsoft is in the process of purchasing Call of Duty maker Activision Blizzard for $72 billion dollars.
- The deal needs to be approved by competitions regulators in every country these businesses operate in.
- The UK competitions authority (the CMA) signalled its intent for an advanced investigation into the deal.
- Microsoft president Brad Smith issued a statement, signalling its intent to work with the CMA to address any concerns.
Microsoft is currently in the process of making its biggest acquisition ever, dropping a massive $72 billion on Activision-Blizzard, known for games like World of Warcraft and Call of Duty. To get the deal through, Microsoft needs the approval of every competition regulator in the nations Activision and Microsoft operate in, including key markets like the United States, European Union, and the United Kingdom.
Today, the UK competitions and markets regulator (the CMA) issued a statement declaring its intent to commit to a deeper investigation into how the merger would affect competition in the UK console market.
“The CMA is ocncerned that having full control over this powerful catalogue, especially in light of Microsoft’s already strong position in gaming consoles, operating systems, and cloud infrastructure, could result in Microsoft harming consumers by impairing Sony’s — Microsoft’s closest gaming rival — ability to compete, as well as other existing rivals and potential new entrants.”
In response, Microsoft president and vice chair Brad Smith issued the following statement:
“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.”
In my view, the CMA’s findings are at odds with the intentions Microsoft has signalled for franchises like Call of Duty and World of Warcraft, expressing the intent to bring them to additional platforms like the Nintendo Switch. In light of that, this step is potentially simply to formalize getting Microsoft on the record with the UK authority, committing to bringing those games to more platforms for example, to ensure that consumers are given more options and better value — rather than less.
To me, it seems like this merger is the only real way Activision investors will get a return on their investment in a company that has seen dwindling monthly active users in recent years. Faced with intense competition from other major service companies like Tencent, Activision has struggled to deliver innovation in some of its key franchises. The company has also struggled to retain some of its developer talent, faced with repeated scandals surrounding its corporate culture. For consumers, Activision is notorious for pricing its games at $70, while charging a $10 fee to unlock resolution bumps on new-gen consoles. Putting these titles into Xbox Game Pass at $10 per month would bring undeniable value for consumers, and I’m not sure how one could argue against this point with honesty.
It could be a long time before the Microsoft and Activision deal is fully realized, but a deal of this magnitude was always going to be subjected to additional scrutiny — and so it should be — Microsoft simply needs to set in stone and prove what it has said all along, that this will result in more access to Activision Blizzard’s games, and better value for consumers.
