The UK CMA (Competition and Markets Authority) has completed its preliminary investigation into the Microsoft-Activision Blizzard merger, and its conclusion is pretty bleak. The CMA says that the merger "could harm" UK gamers and that it could cause a lack of competition between Microsoft and its closest rivals.
In an official UK government statement, the CMA says its provisional investigation has found that the Microsoft acquisition of Activision Blizzard, which was announced last year, could result in "higher prices, fewer choices, or less innovation" for gamers in the UK. According to the CMA, the purchase would "substantially reduce" Microsoft's competition in the cloud gaming and console supply areas.
The CMA's reasoning is thus. Other console manufacturers and cloud gaming suppliers would benefit from access to huge franchises like Call of Duty, but Microsoft would find it "commercially beneficial" to either restrict availability to its own ecosystem or to offer it to others, like PlayStation, under "materially worse conditions". This lack of competition could, according to the CMA, "result in all gamers seeing higher prices, reduced range, lower quality, and worse service".
In a notice of possible remedies to the problem, the CMA outlines three broad solutions: selling the Call of Duty portion of Activision Blizzard, selling the Activision segment, or selling both Activision and Blizzard. Alternatively, Microsoft could simply abandon the merger entirely. All four of these solutions would apparently allay the CMA's concerns, but I can't see Microsoft going for any of them, especially given Activision Blizzard's recent record-breaking financial success.
The CMA isn't the first global authority to voice concerns about the Microsoft-Activision Blizzard merger. The US FTC has filed a lawsuit to halt the acquisition, expressing similar concerns to those raised by the CMA with regards to competition. Microsoft has pointed out that it signed a 10-year deal with Nintendo to bring Call of Duty to Nintendo hardware, and that a similar deal was offered to PlayStation, but that hasn't stopped the CMA raising its issues with the merger and it hasn't caused the FTC to withdraw its lawsuit either. We'll bring you more on this as we get it.