CMA refers Microsoft/Activision to the next level

Some important findings in the CMA’s Phase I decision on the Microsoft / Activision tie-up. 

The CMA recognises that the interactive entertainment market is in the throes of a period of significant disruption, notably coming from the uptake of cloud gaming and the move to a subscription model where gamers pay a monthly fee to access a library of games. The primary concern at this Phase I stage seems to be that the proposed merger will damage rivals in what the CMA sees as a current “window of opportunity” for new entrants. In addition to a specific concern about Microsoft ‘withholding or degrading’ Activision’s content from other consoles/subscription services, the CMA makes a number of points about the broader competitiveness of the ecosystem, given Microsoft’s existing reach into the gaming sector and the related sectors of PC OSs and cloud platforms (via Azure).

The merger will therefore be referred to a Phase II investigation in the UK, unless the merging parties are able in the next few days to offer proposals to resolve the CMA’s concerns. 

The CMA describes this as “a game-changing merger”, and it does indeed seem that the merging parties (and others in the relevant sectors who may be less than happy about the proposed tie-up) have “all to play for”!