CMA to examine US$70 billion Microsoft-Activision Blizzard deal 

The UK’s antitrust watchdog has announced an investigation into Microsoft’s $68.7 billion takeover of Call of Duty and World of Warcraft publisher Activision Blizzard.

The Competition and Markets Authority (CMA) has set a deadline of September 1 to determine whether the takeover would reduce competition in the UK, with the takeover set to be the largest-ever acquisition in the videogame industry.

Announced in January, the deal represents Microsoft’s largest ever acquisition, and is more than double the US$26 billion the company paid for LinkedIn in 2016. The acquisition is largely focused on boosting the Xbox Game Pass subscription offering, which is the closest games industry equivalent to a major service like Netflix.

In a statement provided to Reuters, Microsoft corporate vice president and general counsel Lisa Tanzi said: “We’re committed to answering questions from regulators and ultimately believe a thorough review will help the deal close with broad confidence, and that it will be positive for competition. We expect and think it’s appropriate for regulators to take a close look at this acquisition.”

The outcome of the CMA’s phase 1 investigation will either lead to it being approved, or a more in-depth phase 2 which could delay the planned FY 2023 close. The US’s FTC has announced a similar investigation.

Activision Blizzard continues to be embroiled in controversy surrounding a litany of sexual abuse allegations, with the California Department of Fair Employment and Housing (DFEH) suing Activision Blizzard in July 2021 for “constant sexual harassment”. Its CEO Bobby Kotick, who has been criticised for enabling the toxic culture at the company, will remain as CEO of the publisher and will report directly to Spencer. 

The latest scandal around the publisher is to do with its recently launched mobile game Diablo Immortal which has become Metacritic’s worst-rated game of all time as players criticise its intrusive pay-to-win mechanics. Last month, a player found that it would cost up to US$110,000 to fully upgrade a character, while the quasi gambling mechanics in the game have seen it banned in the Netherlands or Belgium due to regulations on loot boxes.

In spite of this, the game has still reportedly made over US$50 million and has raked in at least $1 million a day since launch. That Activision Blizzard owns both this and Candy Crush developer King only provides further monetary incentive for Microsoft to ensure the deal is wrapped up. 

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