UK regulators find that Microsoft’s Activision-Blizzard buyout could harm UK market

But analysts see it as a posturing ahead of the inevitable


If you thought Activision-Blizzard CEO Bobby Kotick’s appearance on CNBC was a little bit weird, perhaps it’ll make a little bit more sense given that the UK’s Competition and Markets Authority just released the conclusions to its investigation into whether Microsoft’s acquisition of the company could harm UK gamers. The answer is… yep.

“The CMA provisionally found that buying one of the world’s most important game publishers would reinforce this strong position and substantially reduce the competition that Microsoft would otherwise face in the cloud gaming market in the UK. This could alter the future of gaming, potentially harming UK gamers, particularly those who cannot afford or do not want to buy an expensive gaming console or gaming PC.”

So should Activision-Blizzard be panicking? Maybe not. As GIbiz points out, analysts are interpreting the CMA’s impact statement as a good sign for Microsoft’s chances.

“We read today’s release as a signal that the UK knows it has a losing legal argument,” Wedbush analysts Nick McKay and Michael Pachter told investors, as reported by GIbiz. “In our view, the FTC figured this out late last year, and rushed to file suit to block the merger in the hopes of being first to extract concessions from Microsoft. We believe that the CMA reached the same conclusion during its review, and accelerated its formal objection to the deal and proposed remedies in order to step in front of the FTC and gain bragging rights. The FTC has as yet to offer proposed remedies, and the CMA, by listing onerous structural remedies, has positioned itself to be the ‘dragon slayer’ in this action.”

By that interpretation, they’re expecting the deal sealed well before summer, with concessions and “behavioral remedies” – like splitting up the company or making legally binding promises to keep Call of Duty on rival platforms.

In his own memo to ABK staff, Kotick insisted that the CMA’s report is a “normal part of [its] evaluation process” that “opens the door to discuss various commitments Microsoft can make.” That posturing seems to agree with the analysts’ take, though it sure does make you wonder why Kotick sat for that interview if he thought it was a done deal.

Source: CMA, GIbiz
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