The CMA Might Have Blocked The Microsoft-Activision Merger For The Next 10 Years

Microsoft and Activision will be unable to try again for another decade.

Story Highlights

  • According to the final report by CMA, a prohibition will be imposed to ensure that Microsoft and Activision will not attempt to merge for the next 10 years. 
  • CMA believes this prohibition will ensure that the current competitive dynamics in the market remain unchanged.
  • Microsoft proposed that Sony Interactive Entertainment and Google have many reasons to undermine the merger and that the prohibition will not have the effects that CMA believes.
  • According to it, the prohibition further removes the competition by ensuring the ongoing success of ingrained competitors.

The final report by CMA has a lot to unravel, among which, one thing many people might find detrimental is the prohibition being imposed on the Microsoft-Activision merger. The prohibition will render Microsoft and Activision unable to take any steps toward their desired conclusion for the next 10 years, with the CMA citing the need to preserve current competitive dynamics as the reason why it believes this prohibition is necessary.

CMA's Final Report
The Final Report By CMA- Page 336

In short, the CMA believes that the Microsoft-Activision merger would cause unwanted changes in the market’s current competitive dynamics. To tackle such an outcome, it has stated, “Our normal practice would be to prevent a future merger between the Parties for the next ten years, absent a change of circumstances.” On the other hand, Microsoft has given its thoughts on why the prohibition will be bad for the competition.

Final Report by CMA
The Final Report – Page 337

Microsoft believes that SIE and Google have a myriad of reasons to avert this merger and that “through [the] prohibition, the CMA is ensuring the ongoing success of entrenched competitors who have no incentive to expand competition.” CMA presented the views of several other third parties whose names have been redacted from the report.

One third-party presented their views on how it wouldn’t be an effective remedy as it not only disagrees with the SLC finding but could block Activision from entering a long-term deal with Microsoft, having the same effect as the divestiture of the Call of Duty franchise. Another party thought this decision would be disastrous for cloud gaming and the players who cannot access the CoD title.

On the opposite side, Sony stated some benefits of this prohibition and how the decision “would safeguard against the foreclosure strategies Microsoft could employ to withhold or degrade access to Activision content.” CMA seems to share the same thoughts and has, therefore, decided that this prohibition would be the most effective way to prevent any risks or consequences of the merger from taking place.

Aside from CMA blocking the Microsoft-Activision merger, the final report has also disclosed how Microsoft tried to acquire at least one mobile games publisher. Despite all this, Microsoft is determined to show that it will continue to grow with or without the merger. Nevertheless, this will certainly cause considerable issues for both Microsoft and Activision.

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Source
CMA Report

Ahmed Shayan is a News Writer on eXputer with decent experience writing about games. He’s a machine learning enthusiast with a passion for a plethora of gaming genres. Ahmed is fond of Soulsborne games in which he has invested more than 3,000 hours! You can follow Ahmed's gaming activity on his PSN Profile. Experience: 1.5+ Years || Mainly Covers News Stories on eXputer

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