CMA : Microsoft / Activision deal could harm UK gamers
An investigation by the UK ’ s Competition and Markets Authority ( CMA ) has provisionally concluded that Microsoft ’ s proposed acquisition of Activision could result in higher prices , fewer choices , or less innovation for UK gamers . The provisional findings follow a wide-ranging investigation to understand the market and potential impact of the deal .
The CMA provisionally found that being able to offer popular games will be important for cloud gaming providers to attract users as the market continues to grow and develop . The evidence available to the CMA currently indicates that Microsoft would find it commercially beneficial to make Activision ’ s games exclusive to its own cloud gaming service ( or only available on other services under materially worse conditions ). Microsoft already accounts for an estimated 60 % -70 % of global cloud gaming services and also has other important strengths in cloud gaming from owning Xbox , the leading PC operating system ( Windows ) and a global cloud computing infrastructure ( Azure and Xbox Cloud Gaming ).
The CMA provisionally found that buying one of the world ’ s most important game publishers would reinforce this strong position and substantially reduce the competition that Microsoft would otherwise face in the cloud gaming market in the UK . This could alter the future of gaming , potentially harming UK gamers , particularly those who cannot afford or do not want to buy an expensive gaming console or gaming PC .
Microsoft already accounts for an estimated 60 % -70 % of global cloud gaming services
The CMA provisionally found that a small number of key games , including Call of Duty ( CoD ), Activision ’ s flagship game , play an important role in driving competition between consoles . The evidence available to the CMA , including data on how Microsoft measures the value of customers in the ordinary course of business , currently indicates that Microsoft would find it commercially beneficial to make Activision ’ s games exclusive to its own consoles ( or only available on PlayStation under materially worse conditions ). The CMA ’ s provisional findings note that this strategy , of buying gaming studios and making their content exclusive to Microsoft ’ s platforms , has been used by Microsoft following several previous acquisitions of games studios .
The CMA provisionally found that weakening competition by restricting the access that other
turn harming UK gamers . platforms have to Activision ’ s games could substantially reduce the competition between Xbox and PlayStation in the UK , in
Xbox and PlayStation compete closely with each other at present and access to the most important content , such as CoD , is an important part of that competition . Reducing this competition between Microsoft and Sony
could result in all gamers seeing higher prices , reduced range , lower quality , and worse service in gaming consoles over time .
“ It ’ s been estimated that there are around 45 million gamers in the UK , and people in the UK spend more on gaming than any other form of entertainment including music , movies , TV , and books ,” notes Martin Coleman , chair of the independent panel of experts conducting this Phase 2 investigation . “ Strong competition between Xbox and PlayStation has defined the console gaming market over the last 20 years . Exciting new developments in cloud gaming are giving gamers even more choice .”
“ Our job is to make sure that UK 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 . We have provisionally found that this may be the case here . We have also today sent the companies an explanation of how our concerns might be resolved , inviting their views and any alternative proposals they wish to submit .
Microsoft entered into a $ 68.7 billion (€ 60.4bn ) deal to buy Activision , one of the most popular video games publishers in the world , in January 2022 . The transaction is the largest video game acquisition in history , as well as being the largest acquisition that Microsoft has ever made .
In September 2022 , the CMA launched an in-depth investigation into the deal led by an independent panel of experts . The investigation is being conducted alongside similar probes in the US and the EU , as well as a number of other international jurisdictions .
The European Commission has also opened an in-depth investigation to assess the proposed deal under the EU Merger Regulation . The Commission is concerned that the proposed acquisition may reduce competition in the markets for the distribution of console and PC video games and for PC operating systems .
Euro telco consolidation faces significant challenges
The consolidation of the European telecom companies has been a topic of discussion for many years , and while there are potential benefits to such consolidation , there are also several significant challenges that must be overcome , according to data and analytics company GlobalData .
“ Investors , carrier management , and the EU have identified Europe ’ s relative weakness when competing with tech market leaders in the US and China ,” advises Robert Pritchard , senior analyst at GlobalData .
GlobalData analysis identifies that rising costs of investment in nextgeneration access technologies and growing competition are forcing telcos to consider either retrenchment or consolidation .
“ Telcos have been changing their business models in the face of the costs of rolling out next-generation access services such as 5G and fibre broadband , with many carriers selling off their TV and media operations , and refocusing their operating footprints ,” notes Gary Barton , research director at GlobalData . “ The alternative to asset disposals is consolidation for scale .”
According to GlobalData , telcos in Europe operate in a fragmented regulatory regime and the ongoing issues of ownership , security , and licence allocation have hindered the incumbent consolidation . National governments continue to skew the market through continued ownership of stakes in carriers and so-called ‘ golden shares ’ that offer veto rights over who controls the operators .
“ The example of how the US market has evolved is a powerful argument in favour of consolidation ,” suggests Pritchard . “ Perhaps the greatest challenge to the combination of European telcos is the ‘ national champion ’ concept where once dominant domestic carriers are still seen as champions , but in many cases are becoming market laggards .”
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