Activision Blizzard’s Call of Duty: Modern Warfare video game will be inserted into Microsoft’s Xbox One video game console located in Denver, Colorado on Wednesday, January 19, 2022.
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shares of activision blizzard Surge on Friday after Britain’s Competition and Markets Authority narrowed the scope of its investigation microsoftAcquisition of a game publisher by.
The development represents a partial victory for Microsoft in its quest to expand its video game business. The Redmond, Washington-based tech giant has deepened its focus on gaming through major acquisitions, including ZeniMax Media, the parent company of Bethesda Softworks.
In February, the CMA released preliminary findings from its study of the acquisition, at the time saying the deal could lead to higher prices, fewer options and less innovation. . Amid its concerns, regulators warned that the deal would cause a significant reduction in competition in the console games market.
Since then, the regulator has received a “significant amount” of feedback from various industry players on the deal. With this new evidence, the CMA now says it doesn’t believe the deal will deter competition for console games.
“After reviewing the additional evidence provided, we believe that the costs to Microsoft of withholding Call of Duty from PlayStation will outweigh the benefits of taking such action, so the merger would significantly increase competition for console gaming services. It has tentatively concluded that there will be no decline, Martin Coleman, chairman of the independent panel of experts investigating the CMA, said in a statement Friday.
“Our tentative view that this transaction raises concerns in the cloud gaming market is not affected by today’s announcement. Our investigation is expected to be completed by the end of April.”
Activision Blizzard shares surged more than 6% in US pre-market trading. Microsoft shares fell slightly amid the broader market downturn.
Focus on ‘Call of Duty’ delivery
The CMA announcement comes after the US tech giant has also won support from some companies who have opposed or put the deal on hold.
One of the main concerns from Microsoft’s competitors was that the deal would block distribution access to Activision’s premier franchise, Call of Duty. Last month, Microsoft said it signed “his binding 10-year legal contract” to bring Call of Duty to Nintendo players on the same day as Microsoft’s Xbox.
Additionally, Microsoft struck a deal with Nvidia to bring the company’s Xbox games to Nvidia’s GeForce Now cloud gaming service. Microsoft says he will also offer the Activision game library to Nvidia’s service once the acquisition is complete. Nvidia reportedly opposed Microsoft’s acquisition of Activision.
But Microsoft has yet to attract its biggest rival, Sony, which owns the PlayStation console. Brad Smith, Microsoft’s president, told CNBC last month that he’s offering Sony the same deal the company did with Nintendo, a deal Sony still opposes.
A Microsoft spokesperson told CNBC in an email:
“This agreement will give more players more choices in how they play Call of Duty and their favorite games. looking forward to it.”
An Activision spokesperson told CNBC that the CMA’s latest preliminary findings “demonstrate an improved understanding of the console gaming market and a commitment to supporting players and competition.”
“Sony’s campaign to protect control by blocking our merger has failed to overcome the facts, and Microsoft has sought effective and enforceable measures to address each of the CMA’s remaining concerns. We have already offered some remedy, UK.”
Microsoft is not completely indifferent.
The CMA said it still has reservations about the deal as it relates to cloud gaming, where distribution of game content is handled from a remote server rather than from the device’s internal memory. In particular, cloud gaming is still in its infancy and not yet a mass-market technology.
In its preliminary conclusion, the CMA suggested that Microsoft may need to sell some or all of Activision, or just the CoD franchise, to resolve its concerns. The CMA did not provide an update on whether it believed this was a potential solution.
Watchdog will make a final decision on April 26th.
Microsoft also faces uncertainty from regulators in the US and European Union. Smith traveled to Brussels last month to meet with EU regulators.In the United States, the Federal Trade Commission Filed an antitrust lawsuit against Microsoft for trying to block a deal with Activision.
Alphabet, the parent company of Google, According to Bloomberg.
– CNBC’s Steve Kovach contributed to this report