The Competition and Markets Authority (CMA) in the UK has softened its stance on the Microsoft-Activision merger. The CMA initially raised concerns over the deal’s potential to reduce competition in the gaming console market. However, the regulator recently announced that it no longer sees the merger as a significant threat to competition.
The CMA cited new evidence, suggesting that the cost of Microsoft withholding Call of Duty from PlayStation would outweigh any gains from such an action. The announcement was welcome news for Microsoft, which had been facing increased scrutiny over the deal.
Despite the CMA’s new stance, concerns over cloud gaming are yet to be resolved. The CMA’s ongoing investigation is expected to conclude by the end of April.
The news of the CMA’s revised stance had an immediate impact on Activision Blizzard’s stock price. On Friday, the day of the announcement, the company’s shares rose by more than 5%.
The Microsoft-Activision merger, valued at $68.7 billion, was announced in January 2022. If completed, the deal would be one of the largest acquisitions in the gaming industry’s history. The merger would give Microsoft access to some of the most popular game franchises, including Call of Duty and World of Warcraft, which would enhance Microsoft’s position in the gaming industry.
The merger would also complement Microsoft’s expansion into the cloud-gaming market. Cloud gaming has grown significantly in recent years, with many experts predicting that it will become the future of gaming. Microsoft has been investing heavily in its cloud-gaming platform, Azure, and the acquisition of Activision Blizzard would provide it with access to additional expertise in the field.
The CMA’s initial concerns over the merger’s impact on competition were due to Microsoft’s existing dominance in the console market. Microsoft’s Xbox console is the second-largest in the world, with Sony’s PlayStation taking the lead. However, the CMA’s recent announcement suggests that the regulator now believes that the deal will not significantly harm competition in the market.
The Microsoft-Activision merger is still subject to approval from various regulatory bodies, including the CMA and the US Securities and Exchange Commission. However, the CMA’s revised stance suggests that the deal is more likely to receive regulatory approval.
Many analysts and experts in the gaming industry have been closely following the Microsoft-Activision merger, which was announced in January for a total of $68.7 billion. The deal would make Microsoft the third-largest gaming company in the world after Tencent and Sony, giving it access to some of the most popular game franchises such as Call of Duty, World of Warcraft, and Candy Crush.
The CMA initially raised concerns over the merger, stating that it would result in Microsoft having too much control over the console gaming market, potentially leading to higher prices and fewer choices for consumers. However, the CMA has now stated that its investigation has revealed new evidence that suggests otherwise.
While the CMA’s easing of its stance is good news for Microsoft and Activision, the cloud-gaming concerns have not yet been resolved. As more and more consumers turn to cloud gaming, which allows them to play games on their devices without downloading them, concerns over a potential monopolistic control of the market persist.
The ongoing investigation is expected to conclude by the end of April, with a final decision to be made by May 12. Until then, analysts will be watching closely to see how this merger will impact the gaming industry as a whole, including competitors like Sony and Nintendo.
As for Activision Blizzard, its stock rose more than 5% on Friday following the announcement from the CMA, indicating that investors are feeling more optimistic about the merger’s prospects. However, only time will tell how this deal will play out and whether it will ultimately benefit or harm the gaming industry and its consumers.
