Microsoft's bid to buy Activision Blizzard faces anti-trust threat
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Microsoft must address concerns from EU, UK, and US regulators that if it takes control of such market-leading games, it could stifle competition.
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Microsoft logo is seen on a smartphone placed on displayed Activision Blizzard logo in this illustration taken January 18, 2022 (Reuters)
Tech giant Microsoft has kicked off a campaign to convince all three EU, UK, and US regulators to back its $69 billion bid to take over Activision Blizzard, owner of hit games Candy Crush and Call Of Duty.
The effort to create the world's third-largest gaming company by revenue was launched last year, but the company must now address concerns from all three regulators that if it takes control of such market-leading games, it could stifle competition.
Sony, which produces the bestselling PlayStation console, says the deal will give Microsoft the power to limit rivals' access to the popular franchise. However, Microsoft argues it would not make financial sense for it to do so.
The toughest authority to convince could be the UK Competition and Markets Authority (CMA), which, in February, issued preliminary findings that the takeover could harm competition and consumer choice.
The British market is smaller than that of the United States or the European Union, but if the CMA blocks the Activision Blizzard takeover, Microsoft would probably have to back down.
Microsoft would have to comply since removing all of its products from British users would mean losing a huge market, Anne Witt, a professor of anti-trust law at EDHEC business school in France, told AFP.
"It is unthinkable that Microsoft would completely withdraw from the UK. It's not only video games, it's Windows," Witt said, referring to Microsoft's globally dominant PC operating system.
She pointed to the UK regulator's recent decision to order Facebook owner Meta to sell animated graphics startup Giphy, ruling that the deal would harm competition.
"The CMA is the first competition agency ever to have prohibited a big tech acquisition," the professor highlighted.
If the CMA takes a harder line than Brussels on the Microsoft and Activision Blizzard deal, it would mark the first time since Brexit that the UK regulator has differed from the EU in such a major case.
But Microsoft could appeal to the competition appeals tribunal, where experts say they have a real chance of winning.
The CMA is expected to rule by April 26, while the EU is due to decide by May 22, so there is space for them to diverge from each other -- or for either to disagree with the US Federal Trade Commission (FTC).
Microsoft to face a challenge in US home market
On the other hand, the European Commission is expected to be an easier hurdle than Britain. During Microsoft executive Brad Smith's visit to Brussels, he appeared confident that the EU would approve the acquisition after the company showed evidence of its deals with cloud gaming service providers.
Microsoft argues that these will give 150 million more people access to games like Call of Duty.
Meanwhile, Microsoft still has to face a challenge in its US home market from the FTC, which has filed suit to block the takeover, alleging the firm had previously acquired smaller gaming companies to take their games exclusively.
But Witt considered that the chances that the FTC could convince a US court to scold the deal were "very low".
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