Microsoft’s Activision deal faces in-depth scrutiny in Brussels and London

Microsoft’s acquisition of DKK 75 billion. USD of video game maker Activision Blizzard is facing in-depth investigations in Brussels and the UK after growing concerns that the deal is anti-competitive and will exclude rivals from accessing the blockbuster game Call of Duty.

It comes as Britain’s Competition and Markets Authority is expected to launch an in-depth investigation this week after Microsoft decided not to offer any legal remedies at this stage, according to two people with knowledge of the situation.

Earlier this month, the CMA became the first global antitrust regulator to raise the alarm over the transaction, giving Microsoft five days to come up with commitments that would address its concerns or face an expanded “phase 2” investigation.

The companies have already been in talks with regulators in Brussels since the deal was announced eight months ago, in what is known as the pre-notification stage – an indication of how careful officials will be during the investigation.

Regulators and others involved in the deal expect a lengthy EU investigation when Microsoft formally files its case in Brussels in the coming weeks. People familiar with the EU’s thinking say regulators will take time to scrutinize this deal because of its size, the nature of the buyer and the growing concerns of competitors including Sony.

“It’s a big deal, a tough deal,” said a person in Brussels familiar with the transaction. – It requires a comprehensive investigation.

It comes after Sony last week accused Microsoft of misleading the games industry and regulators about its commitments to keep Call of Duty on PlayStation consoles. It said Microsoft had only offered to keep publishing Activision’s hit games on PlayStation for a limited number of years.

The UK move outlines the problems Microsoft will have to overcome to complete its biggest ever deal. The American technology giant hopes to close the deal by the end of June next year, but must first clear regulatory hurdles in countries from New Zealand to America.

Microsoft has chosen not to offer any remedy to the CMA at this stage because there were no obvious commitments that the UK regulator was likely to accept, according to people with knowledge of the situation.

The watchdog generally does not accept behavioral remedies, such as commitments to maintain access to a product or service, at the end of a Phase 1 probe except in rare cases.

An antitrust lawyer familiar with the matter said it was “almost impossible” for Microsoft to offer a remedy that would prevent the investigation from moving to an in-depth antitrust investigation.

The Activision deal comes at a time when regulators around the world are concerned that they have not been as interventionist as they should have been regarding previous Big Tech deals.

Gaming rivals say they fear Microsoft will offer commitments it can easily “wriggle out of” and are not sustainable. Sony and others want the commission to force Microsoft to offer guarantees that they will be able to access all games “on equal terms and in perpetuity.”

Microsoft has said it will continue to make Call of Duty available on other companies’ game consoles, such as the PlayStation, rather than making it an exclusive title on Microsoft’s Xbox. Brad Smith, Microsoft’s president and vice chairman, had previously said “we want people to have more access to games, not less”.

The company could choose to make a formal commitment to the CMA to guarantee its rivals’ access to games in the second phase of the investigation, where an independent panel will analyze the deal in depth and consider potential solutions to antitrust issues.