Microsoft’s acquisition of Activision could hinder competition, UK watchdog warns

Gamers would be left worse off if Microsoft acquired a California-based video games company, Britain’s Competition and Markets Authority (CMA) has warned.

An independent investigation by the CMA has provisionally concluded that the proposed deal – the largest of its kind in history – could result in higher prices, fewer choices, and less innovation for British gamers.

It said that the acquisition could weaken the “important rivalry” between Microsoft’s Xbox and Sony’s PlayStation gaming consoles.

“Merger could make Microsoft even stronger in cloud gaming, stifling competition in this growing market and harming UK gamers who cannot afford expensive consoles,” the CMA said.

Similar probes are underway in the US and the EU, and could derail Microsoft’s plans to acquire Activision, a California-based company behind popular games like Call of Duty.

The CMA concluded that Activision games played “an important role in driving competition between consoles” and expressed concern that Microsoft could make them exclusive to its platforms.

This strategy “has been used by Microsoft following several previous acquisitions of games studios,” the CMA said.

Microsoft said it was committed to offering “effective and easily enforceable” solutions to address the CMA’s concerns.

“Our commitment to grant long term 100% 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,” Microsoft Corporate Vice President and Deputy General Counsel Rima Alaily said in a statement to Cybernews.

The CMA said it would consider responses from all interested parties before making the final decision by late April. If the $68.7 billion deal to acquire Activision goes through, it will become the largest video game acquisition in history, as well as Microsoft’s most expensive purchase to date.

Gaming is a sizeable business in the UK, where consumers spend more on games than other forms of entertainment, such as television, video streaming, cinema, music, or books. In 2022 alone, £5 billion ($6 billion) was spent on gaming in the UK.