Microsoft’s Activision Blizzard Sale Runs Into More Legal Issues
Microsoft hits another snag in the ongoing drama of the tech giant’s attempt to acquire Activision Blizzard.
Microsoft has been running into so many different issues trying to acquire the video game studio Activision Blizzard. The FTC has been working on blocking the merger in the U.s., and different companies have given the FTC ammo to stop the sale from happening.
Microsoft seems to think the best course of action is to focus on anything that comes up on the UK’s Competition and Markets Authority & the European Union Commission’s end. The idea was that any issues they have, they can fix and present to the FTC as easy wins. Well, turns out things didn’t work out that.
via Microsoft
European Commission Has Concerns
According to Politico, the European Union has issued Microsoft a form of antitrust warning about the merger. The EU sent Microsoft a list of concerns in a statement involving concerns with the sale. The Commission had started an in-depth investigation into the situation back in November. The European Commission released a statement at the time.
“Such foreclosure strategies could reduce competition in the markets for the distribution of console and PC video games, leading to higher prices, lower quality and less innovation for console game distributors, which may, in turn, be passed on to consumers.”
A spokesperson with Microsoft said that the company is committed to finding a path forward and are listening carefully to the European Commission’s concerns. The company seems confident it can address those concerns. We don’t know the specifics of what Microsoft plans to change to make the sale acceptable.
The UK’s Detailed Concerns
VG247 reports that the UK’s Competition & Markets Authority has warned that the sale will actually be “harmful to UK gamers.” A press release was sent out about the CMA’s investigation into the matter. The investigation concluded that the sale could “result in higher prices, fewer choices, or less innovation for UK gamers.”
The findings of the independent investigation are basically that the merger would make competing with Microsoft incredibly difficult in the cloud gaming space. This could cause UK gamers to have to buy expensive consoles or PCs to keep up. Call of Duty is prominently part of the arguments and Microsoft has tried really hard to convince them it’s not a big deal.
The statement went on to explain that “restricting the access that other platforms have to Activision’s games could substantially reduce the competition between Xbox and PlayStation in the UK, in turn harming UK gamers.” They figure that less competition makes it easier for companies to increase pricing, reduce quality, and worsen services for gamers.
Spider-UK is not amused by the merger on behalf of gamers
Martin Coleman, chair of the independent panel of experts conducting the 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.”
The UK’s Demands
The CMA will let the merger go through, but only if one of 3 things happens:
- Sell Call of Duty
- Sell Activison and keep Blizzard
- Keep everything except Activision and Blizzard
I understand the idea of breaking up parts of the company. The argument is that a large merger would create a monopoly in the gaming world. But this is a very large ask of Microsoft. Bobby Kotick, CEO of Activision Blizzard, argues that the UK just doesn’t know what they’re talking about. Kotick was on an interview with CNBC discussing it and said,
“Whether it’s the FTC or the CMA or the EU, they don’t know our industry, so they’re trying to come up to speed and understand the industry better,”
“I don’t think they fully appreciate that it’s a free-to-play business, that the Japanese and Chinese companies dominate the industry. You look at Sony, you look at Nintendo, they have these huge libraries of intellectual properties. Sony studios goes back 80 years, Nintendo has the very best characters that exist in video games.”
“And I think they are a little bit confused where competition is today. The best companies in the world right now are companies like Tencent and ByteDance, and these are companies that all have protected markets.”
Subscribe to our newsletter!Get Tabletop, RPG & Pop Culture news delivered directly to your inbox.By subscribing you agree to our Terms of Use and Privacy Policy.“We’ve struggled to enter the Japanese market, we can’t enter the Chinese market without a joint venture partner, so the competition isn’t actually European companies, American companies, it’s really those companies in Japan and China.”
I hate to say it, but Kotick might have a point. Not many in government, or even the general public, are experts in the gaming industry in each country. Japan is notorious for not caring at all about the Xbox. No one really knows how many collector’s editions go to consumers in the UK, EU, or the US. Gaming is a strange business, and that may be the biggest problem for Microsoft in all this mess.
The CMA according to Kotick
Microsoft hasn’t yet heard back from the FTC. But if things are going this poorly in the UK and EU, its going to have a hard time pushing this sale through.
Let us know in the comments what your thoughts are on the UK’s demands on the Microsoft-Activision Blizzard merger.
“What do they want from me? Why can’t they leave me alone? I mean, what do they want from me?” – Bernard, Black Books
