Can the CMA block Microsoft Activision?

Can the CMA Block Microsoft Activision?

The proposed merger between Microsoft and Activision Blizzard has been making headlines in the tech industry. The deal, valued at $68.7 billion, would see Microsoft acquire the popular gaming company Activision Blizzard, making it one of the largest deals in the history of the gaming industry. However, the deal has faced scrutiny from regulators, including the UK’s Competition and Markets Authority (CMA). In this article, we’ll explore whether the CMA can block the Microsoft Activision deal.

Why is the CMA Scrutinizing the Deal?

The CMA is concerned that the merger would reduce competition in the gaming industry, leading to higher prices and reduced innovation. The regulator has raised several concerns, including:

• Reduced Competition in the Gaming Market: The CMA believes that the merger would reduce competition in the gaming market, allowing Microsoft to dominate the industry and reduce innovation.
• Increased Prices for Consumers: The regulator is worried that the merger would lead to higher prices for gamers, as Microsoft would have more control over the gaming market.
• Reduced Choice for Gamers: The CMA believes that the merger would reduce choice for gamers, as Activision Blizzard’s popular titles, such as Call of Duty and World of Warcraft, would be controlled by Microsoft.

Can the CMA Block the Deal?

The CMA has the power to block the deal if it is deemed to be anti-competitive. The regulator can use several tools to block the deal, including:

• Merger Referal: The CMA can refer the deal to the UK’s Secretary of State for Business, Energy and Industrial Strategy, who can then block the deal.
• Divestiture: The CMA can require Microsoft to sell off some of Activision Blizzard’s assets, such as its popular titles, to reduce the competition in the gaming market.
• Behavioral Remedies: The CMA can impose behavioral remedies, such as restrictions on how Microsoft can use Activision Blizzard’s data, to prevent anti-competitive behavior.

What are the Next Steps?

The CMA has until November 2023 to complete its investigation and make a decision on the deal. If the regulator decides to block the deal, Microsoft and Activision Blizzard can appeal the decision to the UK’s Competition Appeal Tribunal. However, if the deal is approved, it would still be subject to other regulatory approvals, including those from the US Federal Trade Commission and the European Commission.

Conclusion

The proposed merger between Microsoft and Activision Blizzard is a complex and highly scrutinized deal. While the CMA has the power to block the deal, it is still uncertain whether the regulator will approve or reject the merger. The outcome of the investigation will have significant implications for the gaming industry, as well as for Microsoft and Activision Blizzard’s businesses.