The European Commission has officially launched an in-depth investigation into Xbox Game Studios (Microsoft) [2,289 articles]” href=”https://www.videogameschronicle.com/companies/microsoft/”>Microsoft’s Proposed Acquisition of Activision Blizzard [1,158 articles]” href=”https://www.videogameschronicle.com/companies/activision-blizzard/”>Activision Blizzard.
As expected, following its initial investigations into the $68.7 billion deal, the European watchdog said on Tuesday it had opened a “phase II” investigation due to competition concerns.
“The Commission is concerned that the proposed acquisition may reduce competition in the distribution markets for consoles and personal computers (‘ PC [6,508 articles]” href=”https://www.videogameschronicle.com/platforms/pc/”>PCs’) video games and for PC operating systems,” it said.
Accolades Trailer | Call of Duty: Modern Warfare II
The commission now has 90 working days, until March 23, 2023, to make a final decision on the deal.
It said its preliminary investigation showed the transaction could significantly reduce competition in several areas.
“The Commission is particularly concerned that by acquiring Activision Blizzard, Microsoft may foreclose access to Activision Blizzard’s console and PC video games, particularly to high-profile and highly successful games (so-called ‘AAA’ games) such as ‘Call. of Duty'” , wrote it.
“The preliminary investigation suggests that Microsoft may have the ability, as well as a potential financial incentive, to engage in foreclosure strategies against Microsoft’s rival distributors of console video games, such as preventing those companies from distributing Activision Blizzard’s console video games on consoles or degrading the terms of their use of or accessing these video games.
“When it comes to multi-game subscription services and/or cloud game streaming services in particular, the Commission is concerned that Microsoft, by acquiring Activision Blizzard, may foreclose access, to the detriment of its rival distributors of console and PC video games that offer such services to its own PC and console video games, which are key to providing the nascent multiplayer subscription and cloud game streaming services.
“Such foreclosure strategies can reduce competition in the console and PC video game distribution markets, leading to higher prices, lower quality and less innovation for console game distributors, which in turn can be passed on to consumers.
“Finally, at this stage of the investigation, the Commission has concerns that the proposed acquisition may reduce competition in the PC operating system market. The Commission is particularly concerned that Microsoft may reduce the ability of rival PC operating system vendors to compete with Microsoft’s Windows operating system , by combining Activision Blizzard’s games and Microsoft’s distribution of games via cloud game streaming to Windows, this would discourage users from purchasing non-Windows PCs.
“The preliminary investigation suggests that Microsoft may have the ability, as well as a potential financial incentive, to engage in such conduct toward competing PC operating system vendors.”
The proposed acquisition is being scrutinized by regulators around the world due to antitrust concerns at a time of increasing consolidation in the gaming industry.
While the deal has been approved by regulators in Saudi Arabia and Brazil, the UK’s Competition and Markets Authority recently extended its investigation into a second phase. It is inviting the public to share its views on the acquisition before making its final decision by March 1.
The US Federal Trade Commission could reportedly make its decision on the deal this month.
Microsoft head of games Phil Spencer [486 articles]” href=”https://www.videogameschronicle.com/people/phil-spencer/”>Phil Spencer recently said he believes heavy scrutiny from regulators is “fair” and “justified,” and that he remains confident that the deal will be approved.
Activision Blizzard CEO Bobby Kotick [99 articles]” href=”https://www.videogameschronicle.com/people/bobby-kotick/”>Bobby Kotick echoed that sentiment in a message sent to employees on Tuesday, saying “the process is going as we expected”.
He wrote: “With so many large global companies worldwide now competing in the nearly $200 billion gaming industry, it is understandable that regulators are seeking to better understand the gaming industry. This week, the European Commission announced that we have entered the second phase of our review in the region We will continue to cooperate with the European Commission where in the countries they represent we have many employees.
“We have worked closely with Microsoft to actively engage regulators in other key countries to answer their questions and provide them with information to assist them in their review. People from all of our business units and functions have been involved in this regulatory effort, and I would like to thank each of you for your tireless work and commitment to complete this merger, which we continue to expect to close during Microsoft’s current fiscal year ending June 2023.”
Activision [1,010 articles]” href=”https://www.videogameschronicle.com/companies/activision-blizzard/activision/”>Activision said Monday that Modern Warfare 2 continues to be the fastest-selling entry in the Call of Duty franchise after its October 28 launch .
After topping $800 million in sales in its first three days of availability, Modern Warfare 2 crossed the $1 billion mark in 10 days. In doing so, it surpassed the record previously held by 2012’s Black Ops 2, which took 15 days to reach $1 billion in sales.
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