Microsoft announced in January that it had acquired Activision Blizzard, a major gaming company, for about $ 69 billion. But the acquisition path for the two companies has not been smooth and the agreement has not yet been sealed.
Now another speed bump appears. The Competition and Market Authority (CMA), the United Kingdom’s regulatory agency, is conducting a formal investigation into whether the purchase will be anti-competitive and in violation of UK no-confidence laws.
CMA investigations work in phases and today’s announcement marks the beginning of Phase 1. “Any interested party” is invited to comment on the proposed Microsoft / Activision Agreement now and between 20 July. From there, Phase 2 will be announced on September 1, deciding whether to proceed with the investigation.
“The Competition and Markets Authority (CMA) is considering whether or not the transaction, if implemented, would create the relevant merger conditions under the merger provisions of the Enterprise Act 2002. Therefore, the creation of that situation can be expected to significantly reduce competition in any market or markets for goods or services in the United Kingdom, “the inquiry said in a statement.
And in less impenetrable legal-es language: regulators are trying to figure out whether Microsoft, the third-largest tech company, the fifth-largest gaming company, will buy and merge with Activision Blizzard to push others out of the market. So does this mean monopoly?
For reference, if this deal happens, it will be the largest tech merger ever. Activision Blizzard is behind generation-defined gaming hits such as Call of Duty franchise, World of Warcraft and even Candy Crush. Meanwhile, Microsoft already has Xbox. Under Activision, the company will become the “third largest gaming company in the world in terms of revenue, behind Tencent and Sony.”
It has been clear from the outset that there will be distrust concerns, so the UK announcement is not surprising. The threshold for CMA inspections is reached when either the company’s total UK revenue exceeds £ 70 million or as a result the company accounts for 25% or more of all UK sales in that area. The U.S. Federal Trade Commission launched its own inquiry a few months ago. So far, no results have been released from either investigation. However, either the regulatory agency can close the deal or demand that it be reduced in some way.
Beyond the possibility of a competitive gaming monopoly, Activision Blizzard has faced a number of recent problems. The company was sued in 2021 by the California Department of Fair Employment and Housing after years of lengthy investigation uncovering several stories of sexual harassment and abuse. Since that lawsuit, more former employees have come forward with claims. And Bobby Coutick, the company’s CEO, knew about the allegations of abuse against his company over the years without addressing them.
This has been followed by a flurry of workers’ rights, with workers saying that Activision Blizzard is involved in union busting. Employees of the company successfully voted to form a union in May. However, the position of that union is a bit fragile considering the planned purchase. Microsoft has publicly agreed to be “labor neutral” for 60 days after the acquisition was finalized.