The Competition and Markets Authority said it would examine whether the deal could harm competition
The software giant made a 68.7 billion dollar (£57.7 billion) offer to merge with the billion-dollar gaming giant in January, but the Competitions and Markets Authority has said it could harm competition and lead to “worse outcomes for consumers”.
Activision Blizzard owns Call Of Duty, World Of Warcraft and Candy Crush franchises, each of which have millions of players around the world. Control over those properties could give Microsoft a huge advantage for its Xbox library against Sony’s PlayStation.
The CMA said it wants to examine whether the deal could harm consumers by leading to “higher prices, lower quality, or reduced choice”. It has until 1 September to decide if it believes the merger may harm competition, and, if it believes it could, it will launch an in-depth investigation into the deal.
It added that it will engage “as appropriate” with its competition authority counterparts around the world who are also looking into the merger.
The regulator said it is also inviting views on the deal from interested third parties, with a submission deadline of July 20, as part of its initial assessment.
“We will fully co-operate with the CMA’s merger review. We expect and think it’s appropriate for regulators to take a close look at this acquisition. We have been clear about how we plan to run our gaming business and why we believe the deal will benefit gamers, developers, and the industry”, Lisa Tanzi, Microsoft’s corporate vice president and general counsel, said.
“We’re committed to answering questions from regulators and ultimately believe a thorough review will help the deal close with broad confidence, and that it will be positive for competition. We remain confident the deal will close in fiscal year 2023 as initially anticipated.”
Microsoft said at the time that it was buying Bethesda in part to beef up its Xbox Game Pass game subscription service, which it said has over 15 million subscribers.
The Competition and Markets Authority has a track record of scrutinizing, and sometimes preventing, big tech mergers and acquisitions.
The watchdog cleared Microsoft’s $16 billion deal to buy speech recognition company Nuance but blocked Facebook’s acquisition of the GIF-sharing platform Giphy and ordered the deal unwound, saying it hurt social media users and advertisers by stifling competition for animated images.
Additional reporting by Press Association and Associated Press