UK Watchdog Offers Microsoft an Activision Deal Remedy: Sell Call of Duty

The UK competition regulator has provisionally concluded today that Microsoft’s acquisition of Activision Blizzard is harmful and therefore unlikely to be approved. However, some remedies are available that could change its mind.

In a press release(Opens in a new window), the UK’s Competition and Markets Authority (CMA) explained that “Microsoft’s proposed acquisition of Activision could result in higher prices, fewer choices, or less innovation for UK gamers.”

The provisional conclusion is based on the CMA spending five months analyzing over 3 million internal documents, commissioning an independent survey of UK gamers, gathering evidence from other companies in the gaming market, and interviewing “business leaders” from both Microsoft and Activision. In other words, it has been thorough.

The CMA points out that Microsoft “already accounts for an estimated 60-70% of global cloud gaming services” as well as owning Xbox, Windows, and the Azure service. The regulator also found evidence that “Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own consoles (or only available on PlayStation under materially worse conditions)” and points to Microsoft doing exactly that in the past with other gaming studios.

(Credit: Microsoft)

The provisional conclusion does come with some possible remedies that could see the deal approved, but they are unlikely to be considered by Microsoft.

In a separate document(Opens in a new window) the CMA suggests “structural remedies” to make the acquisition more palatable for the regulator. Top of the list is a suggestion that the Call of Duty business be sold so that it remained independent and not under the control of Microsoft. The CMA also suggests Microsoft could sell off the Activision part (including Call of Duty) or the Blizzard part of the business.

The suggested remedies pose a problem for Microsoft because it has always insisted that Call of Duty is not the main focus of the deal. Microsoft says it wants Activision Blizzard to help it gain a foothold in the mobile gaming market, as well as allowing it to bring more big games(Opens in a new window) to Game Pass. It could easily still do both by agreeing to sell off Call of Duty, so if the idea is refused outright it could make Microsoft’s previous statements look disingenuous.

The thing Microsoft may be most concerned about now is the idea of Call of Duty remaining independent being seen as a good solution elsewhere, meaning the FTC could suggest it, too.