Microsoft has run into another obstacle in its attempt to acquire Activision Blizzard. On Wednesday, the UK’s Competition and Markets Authority (CMA) launched a formal investigation into the record-breaking $68.7 billion deal announced in January. The regulator is concerned that the acquisition might violate UK antitrust laws and create an anticompetitive market. The CMA feels vigilance is necessary considering that Microsoft is the third largest tech company and Activision Blizzard is the fifth largest gaming company. The deal also follows the Redmond giant’s recent $7.5 billion ZeniMax purchase. A successful acquisition of Activision would mark a considerable gaming industry consolidation falling under Microsoft’s umbrella, making it the third largest gaming company in the world behind Tencent and Sony.
The investigation is not all that surprising. The CMA routinely looks at any merger where the acquired company’s gross revenue exceeds £70 million or if the purchase would give the buyer 25 or more percent of the market in any given sector. Activision’s net revenue in 2021 was $8.8 billion. That’s £7.4 billion, well over the CMA’s gross threshold for opening a probe. The CMA’s investigation will tie up the acquisition until at least September 1, when the regulator decides whether to approve the deal or move on to the second phase of the probe. In the meantime, the CMA will accept comments on the merger from interested parties. Expect consumer watchdog groups to chime in loudly. The US Federal Trade Commission initiated a probe in February for similar reasons, which brought out many watchdog groups, including Public Citizen, Center for Digital Democracy, Communications Workers of America, The Repair Association, Public Knowledge, and American Economic Liberties Project. They fear the merger would hamper Activision employees’ unionization efforts and have “anticompetitive horizontal effects” within the industry. Image credit: Raimond Spekking
