An Activision Blizzard’s Call of Duty: Modern Warfare video game is inserted into the Microsoft’s Xbox One video game console arranged in Denver, Colorado, on Wednesday, Jan. 19, 2022.
Michael Ciaglo | Bloomberg | Getty Images
The U.K.’s Competition and Markets Authority on Friday said it has narrowed the scope of its investigation into Microsoft’s takeover of games publisher Activision, in a major reprieve for the U.S. tech giant as it pursues an expansion of its video game business.
In February, the CMA published provisional findings from its probe into the takeover, stating at the time that the transaction may result in higher prices, fewer choices and less innovation. Among its concerns, the regulator flagged that the deal would cause a substantial lessening of competition in the console gaming market.
Since then, the regulator has received a “significant amount” of feedback from various industry participants on the deal. With this new evidence, the CMA now says it no longer believes the transaction will hamper competition in console games.
“Having considered the additional evidence provided, we have now provisionally concluded that the merger will not result in a substantial lessening of competition in console gaming services because the cost to Microsoft of withholding Call of Duty from PlayStation would outweigh any gains from taking such action,” Martin Coleman, chair of the independent panel of experts conducting the CMA investigation, said in a statement Friday.
“Our provisional view that this deal raises concerns in the cloud gaming market is not affected by today’s announcement. Our investigation remains on course for completion by the end of April.”
Shares of Activision Blizzard surged more than 6% in U.S. premarket trading. Microsoft shares were slightly lower amid a broad market slump.
This comes after the U.S. technology giant has also won support from some companies that were against the deal, or at least sitting on the fence.
One of the major concerns from Microsoft’s competitors would that it would block access to Activision’s crown jewel franchise — “Call of Duty.” But last month, Microsoft said it signed a “binding 10-year legal agreement” to bring Call of Duty to Nintendo players on the same day as Microsoft’s Xbox, “with full feature and content parity.”
Microsoft also signed a deal with Nvidia to bring its Xbox games to Nvidia’s GeForce Now cloud gaming service. Microsoft said it would also bring Activision games library to Nvidia’s service if the acquisition closes. Nvidia was reportedly against Microsoft’s Activision takeover.
However, Microsoft has yet to get its biggest rival Sony, the owner of the PlayStation console, onside. Microsoft President Brad Smith told CNBC last month that the company is offering Sony the same agreement as Nintendo — to have Call of Duty available on PlayStation the same time as Xbox with the same features. However, Sony still remains opposed to the deal.
Microsoft still faces uncertainty from regulators in the U.S. and European Union. Smith travelled to Brussels last month to meet with EU regulators.
Meanwhile, in the U.S., the Federal Trade Commission filed an antitrust case against Microsoft attempting to block the Activision deal.
And Microsoft still has some major companies with reservations about the acquisition. Google parent Alphabet reportedly has concerns about the deal.
This is a breaking news story and will be updated shortly.
– CNBC’s Steve Kovach contributed to this report
