The CMA keeps constructive remedies on the table in Microsoft / Activision investigation

The CMA released a set of provisional findings on its probe into Microsoft’s acquisition of Activision Blizzard. The CMA have expressed a concern that Microsoft could restrict Activision Blizzard’s “must have” titles to its own console and cloud gaming offerings, thus forcing consumers to its ecosystem. 

See the CMA’s Summary of its Provisional Findings here. The deadline for stakeholder response is March 1st.

This would be consistent with Microsoft’s commercial strategy to date, who have restricted the availability of several games produced by publishers that they have acquired. Given Activision’s roster of hugely popular video games, which include Call of Duty, access restrictions could risk tipping the market, particularly in cloud gaming, where users sign-up for a relatively low monthly subscription fee to access a range of games, and thus, the cost barriers to switching are far lower. To switch hardware in order to purchase Call of Duty to play on the new Xbox Series S would cost $356.99; Xbox Game Pass costs just $9.99 a month.

In contrast to the FTC, however, who sued to block the deal at the end of last year, the CMA are considering behavioural commitments, in addition to prohibition or divestiture, as a potential remedy to the competition harm. See the CMA’s Notice of possible remedies here. The deadline for responses to the CMA’s proposed remedies is February 22nd. 

We at MOW welcome the CMA’s review of constructive remedies and indeed, would argue that the merger could have a number of procompetitive outcomes, particularly in its potential to remedy Apple and Google’s duopoly in app distribution. See our post linked here