UK competition watchdog to investigate Microsoft's acquisition of Activision Blizzard

Activision booth at E3 2017
(Image credit: Patrick T. Fallon/Bloomberg via Getty Images)

The year's biggest news so far has been Microsoft's proposed takeover of Activision Blizzard, in a deal that could be worth $68.7 billion. Activision Blizzard's shareholders have approved the deal, but due to its sheer size (this would be the biggest acquisition in the industry's history by some considerable distance) is attracting the attention of regulators worldwide.

The acquisition is currently being investigated by the US Federal Trade Commission, and now the UK's equivalent body has followed suit. The UK's Competition and Markets Authority, essentially an antitrust watchdog that drinks a bit more tea than the FTC, today announced it would be opening an investigation into the deal.

This is not surprising news. Microsoft is, well, Microsoft: it may no longer be the single most valuable tech company in the world, but it's still up there. Activision Blizzard's series include the incredibly dominant and profitable Call of Duty, as well as Blizzard's all-star lineup of Diablo, Warcraft, and Starcraft, and that's before we even mention the all-encompassing reach of King's saccharinely sociopathic Candy Crush games.

This is also in the wider industry context of major platform holders looking to build subscription services. Which is why Microsoft has been at pains to point out it will keep Call of Duty on PlayStation: after all, as long as the deal goes through, such promises can be re-visited somewhere down the line.

The CMA's press release says the body "is considering whether it is or may be the case that this transaction, if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services."

Lessening of competition is bureaucratese for worse consumer outcomes: "for example, through higher prices, lower quality, or reduced choice."

Microsoft

(Image credit: Davis Ramos (Getty))

The regulator's announcement marks the start of a consultation period which runs for two weeks, during which interested parties can make comments on the transaction. This closes on July 20, after which the 'phase one' decision is due by September 1 2022, though the CMA can move that date if it needs more time.

Trying to predict what regulators will say is a bit of a fool's game, simply because of the size of this deal. For what it's worth, we spoke to a lawyer who generally leaned towards the deal eventually being waved through.

Regulators sniffing around may not even be Microsoft's biggest problem with this acquisition, however, with Activision Blizzard still facing various lawsuits alleging sexual harassment and assault alongside other discriminatory practices . The fate of Activision Blizzard CEO Bobby Kotick and the company's other senior management, should the acquisition go through, also remains an unresolved question that will have to be answered.

Rich Stanton

Rich is a games journalist with 15 years' experience, beginning his career on Edge magazine before working for a wide range of outlets, including Ars Technica, Eurogamer, GamesRadar+, Gamespot, the Guardian, IGN, the New Statesman, Polygon, and Vice. He was the editor of Kotaku UK, the UK arm of Kotaku, for three years before joining PC Gamer. He is the author of a Brief History of Video Games, a full history of the medium, which the Midwest Book Review described as "[a] must-read for serious minded game historians and curious video game connoisseurs alike."