Microsoft’s bid to buy the gaming giant faces a triple anti-trust threat

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Xbox owner Microsoft seeks to build world’s third-largest gaming company by revenue last year with purchase of Activision Blizzard.

Depending on which side you’re on, tech giant Microsoft is either the hero fighting to bring some of the most popular video games to more people, or the villain on the verge of killing off the competition in the industry.

The Xbox owner has embarked on a campaign to get all three regulators in the EU, UK and US to back his $69 billion bid to buy Activision Blizzard, owner of hit games ‘Candy Crush’ and “Call Of Duty”.

The effort to create the world’s third-largest gaming company by revenue was launched last year, but the company now faces concerns from all three regulators that if it takes over such market-leading games it could stifle competition. .

Sony, which makes the best-selling PlayStation console, says the deal will give Microsoft the power to restrict rivals’ access to the popular franchise. Microsoft argues that it would not make financial sense to do so.

And the toughest authority to convince may be the UK Competition and Markets Authority (CMA), which in February published preliminary findings that the takeover could hurt competition and consumer choice.

The UK market is smaller than that of the US or the EU, but if the CMA were to block the acquisition of Activision Blizzard, Microsoft would probably have to back off.

Microsoft would have to comply as removing all of its products from UK users would mean losing a huge market, Anne Witt, an antitrust law professor at the EDHEC business school in France, told AFP.

“It’s unthinkable that Microsoft would withdraw completely from the UK. It’s not just about video games, it’s Windows,” said Witt, referring to Microsoft’s globally dominant PC operating system.

Witt highlighted the UK regulator’s recent decision to order Facebook owner Meta to sell motion graphics startup Giphy, ruling the deal would hurt competition.

“The CMA is the first competition agency ever to ban a major technology acquisition,” Witt told AFP.

“At a Loss”

If the CMA takes a tougher line than Brussels on the deal between Microsoft and Activision Blizzard, it would mark the first time since Brexit that the UK regulator has diverged from the EU in such a major case.

But wealthy Microsoft could appeal to the competition appellate tribunal, where experts say they have a real chance of winning.

And Microsoft seemed to get a reprieve last month when the CMA narrowed the scope of its investigation to cloud gaming, agreeing with Microsoft that if the company made “Call of Duty” exclusive to the Xbox console, “it would be been at a significant loss”.

The CMA is expected to govern by April 26, while the EU is expected to decide by May 22, so there’s room to diverge from each other or disagree with the states’ Federal Trade Commission (FTC). United.

“It’s possible that the UK and the EU and then also the FTC are saying it’s anti-competitive,” said Eleanor Fox, a professor in New York University’s law school.

“And it’s possible to have differences about what the right remedy is, if you stop everything or if you allow Microsoft to make certain promises.”

FTC fight

The case is emblematic of regulators’ recently focused attitude towards big tech companies, and Witt said the British regulator appears to be taking a leadership role among its peers.

The European Commission should be an easier obstacle than Britain.

During Microsoft executive Brad Smith’s visit to Brussels, he appeared confident the EU would approve the acquisition after the company showed evidence of its deals with cloud gaming service providers.

Microsoft claims these will give 150 million more people access to games like ‘Call of Duty’.

Meanwhile, Microsoft still faces a challenge in its US home market from the FTC, which has filed a lawsuit to block the acquisition, claiming the company had previously acquired smaller game companies to take over the games exclusively.

But Witt said the chances of the FTC convincing a US court to strike down the deal are “very slim.”

2023 AFP

Quote: Microsoft’s bid to buy gaming giant faces triple antitrust threat (2023, April 16) Retrieved April 16, 2023 from https://techxplore.com/news/2023-04-microsoft-buy-games -giant-triple.html

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