The UK’s competition regulator has opposed Microsoft’s proposed $69 billion takeover of Activision Blizzard.
The Competition and Markets Authority (CMA) says it will result in higher prices, fewer options, and less innovation.
If it pulls the move off, Microsoft would acquire hit titles such as Call of Duty and Candy Crush in the $69 billion (£57 billion) deal.
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Martin Coleman, chair of the independent panel of experts conducting this Phase 2 investigation, said:”It’s been estimated that there are around 45 million gamers in the UK, and people in the UK spend more on gaming than any other form of entertainment including music, movies, TV, and books.
“Strong competition between Xbox and PlayStation has defined the console gaming market over the last 20 years. Exciting new developments in cloud gaming are giving gamers even more choice.
“Our job is to make sure that UK gamers are not caught in the crossfire of global deals that, over time, could damage competition and result in higher prices, fewer choices, or less innovation. We have provisionally found that this may be the case here.
“We have also today sent the companies an explanation of how our concerns might be resolved, inviting their views and any alternative proposals they wish to submit.”
What does Microsoft say?
Microsoft said it would find solutions to “address the CMA’s concerns”.
Rima Alaily, Microsoft corporate vice-president and deputy general counsel, said: “Our commitment to grant long-term 100 percent equal access to Call of Duty to Sony, Nintendo, Steam and others preserves the deal’s benefits to gamers and developers, and increases competition in the market.”
She added, according to the CMA’s public survey, 75 percent of respondents “believe that this arrangement is advantageous for competition in UK gaming,”
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Activision said the conclusions were preliminary and that both parties will have an opportunity to comment.
The Call of Duty maker wrote: “We hope between now and April we will be able to help the CMA better understand our industry” in order to help the regulator “achieve their stated mandate” to promote an environment where “fair-dealing business can innovate and thrive”.
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“Not what bosses at the company would have wanted”
Steffan Powell, the BBC’s gaming correspondent, said: “The decision is not curtains for Microsoft’s hope of acquiring Activision Blizzard, but it’s not what bosses at the company would have wanted.
“Over the next few weeks, there will be a lot of back and forth between lawyers and officials – as Microsoft argues that this deal is actually a good thing for UK gamers and not, as this provisional conclusion suggests, restrictive.
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“There has not been scrutiny of a deal like this in gaming’s history, but then there has also not been a £57bn deal like this in gaming’s history either.”
The CMA will now consider potential changes, such as:
Behavioral remedies – Microsoft’s assurances about how the merged company will operate
Structural remedies – the CMA could halt the transaction or order Microsoft to sell a portion of Activision Blizzard.
Source: BBC News
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