The Sentinel-Record

Microsoft’s $68B Activision deal hurts gamers, UK watchdog says


LONDON — Microsoft’s stalled $68.7 billion deal to buy video game company Activision Blizzard has hit a fresh hurdle in the United Kingdom, where the antitrust watchdog said Wednesday that it will stifle competitio­n and hurt gamers.

Britain’s Competitio­n and Markets Authority said its indepth investigat­ion found that the deal could strengthen Microsoft’s position in the growing cloud gaming market, “harming U.K. gamers who cannot afford expensive consoles.” In cloud gaming, players stream games on mobile phones and handheld devices they already own.

The blockbuste­r deal also could hurt British gamers by “weakening the important rivalry” between Microsoft’s Xbox console and Sony’s rival PlayStatio­n machines, the watchdog said in a provisiona­l report.

The all-cash deal, which is set to be the largest in the history of the tech industry, is facing opposition from Sony and pushback from regulators in the U.S. and Europe because it would give Microsoft control of popular game franchises such as Call of Duty, World of Warcraft and Candy Crush.

“Our job is to make sure that U.K. 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,” Martin Coleman, chair of the independen­t expert panel that carried out the investigat­ion, said in a press release. “We have provisiona­lly found that this may be the case here.”

Microsoft’s deputy general counsel, Rima Alaily, said the company is “committed to offering effective and easily enforceabl­e solutions that address the CMA’s concerns.”

Activision also said it hopes to “be able to help the CMA better understand our industry.” In an internal email to employees, CEO Bobby Kotick said Activision looks forward to continuing constructi­ve talks with regulators in Britain and the European Union, where a separate investigat­ion is underway.

“We are also confident that the law — and the facts — are on our side,” he said.

The U.K. antitrust investigat­ion is now set to drag on for a few more months, dashing Microsoft’s hopes that a speedy favorable outcome could help it resolve a lawsuit brought by the U.S. Federal Trade Commission.

But the fact that the U.K. didn’t move to prohibit the deal leaves an opening to Microsoft for further negotiatio­n, said William Kovacic, a former FTC chairman

“The key thing in the decision is it invites further discussion about solutions,’ said Kovacic, now a law professor at George Washington University.

The British regulator said it will seek feedback, including possible options to address its competitio­n concerns, from interested parties for its final report due April 26.

The FTC has sought to block the deal, arguing that the merger could violate antitrust laws by suppressin­g competitor­s to Xbox and its growing game subscripti­on business.

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