UK regulators are finding Microsoft’s acquisition of Activision Blizzard could hurt the UK market

If you thought Activision Blizzard CEO Bobby Kotick’s appearance on CNBC was a little odd, it might make a little more sense as the UK’s Competition and Markets Authority has just released the conclusions of its investigation into whether Microsoft is the company could hurt UK players. The answer is…yes.

“The CMA’s preliminary determination was that the acquisition of one of the world’s top game publishers would strengthen this strong position and significantly reduce the competition Microsoft would otherwise face in the UK cloud gaming market. This could change the future of gaming and potentially hurt UK gamers, particularly those who cannot or do not want to afford expensive gaming consoles or gaming PCs.”

So should Activision Blizzard panic? Maybe not. As GIbiz emphasizes, analysts interpret the CMA’s declaration of effectiveness as a good sign of Microsoft’s chances.

“We see today’s release as a signal that the UK knows it is losing legal arguments,” Wedbush analysts Nick McKay and Michael Pachter told investors, GIbiz reported. “In our view, the FTC found this out late last year and rushed to file a lawsuit to block the merger, hoping to be the first to extort concessions from Microsoft. We believe that the CMA reached the same conclusion during its review and expedited its formal objection to the agreement and proposed remedies to go before the FTC and brag about it. The FTC has not yet offered any proposed remedies, and the CMA has positioned itself as the “dragon slayer” in this action by listing onerous structural remedies.”

According to this interpretation, they expect the deal to be sealed well before the summer, with concessions and “behavioural remedies” – like splitting up the company or making legally binding promises to honor them call of Duty on competing platforms.

In his own memo to ABK staff, Kotick insisted that the CMA report be a “normal part of [its] Evaluation Process” which “opens the door to discuss various commitments Microsoft may make”. This pose seems to be in line with analysts’ opinion, although you’re probably wondering why Kotick sat for this interview if he thought it was a done deal.

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Curtis Crabtree

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