Regulators put the brakes on Microsoft’s Activision acquisition

An Xbox controller on a table next to a Call of Duty game.

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Microsoft’s $75 billion acquisition of video game maker Activision Blizzard is facing intense scrutiny in Brussels and the UK, following growing concerns the deal is competitive and will keep rivals out of access to blockbuster games. call of duty,

It comes as the UK Competition and Markets Authority is expected to launch an in-depth investigation this week, as Microsoft has decided not to take any measures at this stage, according to two persons aware of the situation.

Earlier this month, the CMA became the first global antitrust regulator to sound the alarm over the transaction, giving Microsoft five days to come up with initiatives that would address its concerns or call for an extended “Phase 2” investigation. will face.

The companies have been in talks with regulators in Brussels since the deal was announced eight months ago, in what is known as the pre-notification phase – an indication of how honest officials will be during the investigation.

Regulators and others involved in the deal expect a lengthy EU investigation after Microsoft officially files its case in Brussels in the coming weeks. People familiar with the EU’s thinking say regulators will take their time to scrutinize the deal because of its size, the nature of the buyer, and growing concerns from rivals including Sony.

“It’s a big deal, a tough deal,” said a person in Brussels familiar with the deal. “It needs a comprehensive investigation.”

This comes after Sony last week accused Microsoft of misleading the game industry and regulators about its commitments. call of duty on PlayStation console. It said Microsoft had only offered to continue playing Activision’s hit games on PlayStation for a limited number of years.

The UK move reveals issues that Microsoft will have to overcome to complete its biggest deal ever. The US tech giant is hoping to close the deal by the end of June next year, but will first have to clear regulatory hurdles in countries ranging from New Zealand to the US.

According to people with knowledge of the situation, Microsoft opted not to give any remedy to the CMA at this stage as there was no clear commitment that is likely to be accepted by the UK regulator.

Watchdog does not generally accept behavioral measures such as a commitment to retain access to a product or service at the end of a Phase 1 investigation except in rare circumstances.

A competition attorney with knowledge of the matter said it was “nearly impossible” for Microsoft to introduce a remedy that would prevent the investigation from progressing to a deeper antitrust investigation.

The Activision deal comes at a time when regulators around the world are concerned they are not going to be as interventionist as they should have been with previous Big Tech deals.

Gaming rivals say they fear Microsoft will offer commitments that it can easily “get out of” and that aren’t long-lasting. Sony and others want the commission to force Microsoft to guarantee that they will be able to access all games “on equal terms and in perpetuity.”

Microsoft has said it will continue to make call of duty Available on other companies’ gaming consoles, such as the PlayStation, instead of turning it into an exclusive title on Microsoft’s Xbox. Microsoft President and Vice President Brad Smith previously said, “We want people to have more access to games, not less.”

The company may choose to file a formal commitment to the CMA to guarantee its competitors’ access to the Games during the second phase of the investigation, when an independent panel will conduct an in-depth analysis of the deal and consider possible solutions to antitrust issues. Will do

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