Evaluation of the United Kingdom Competition Authority (CMA) Decision on the Microsoft/Activision Blizzard Acquisition


    Today, the video game industry has become an enormous market. At the early beginning of 2022, Microsoft's announcement[1] that Microsoft would acquire Activision Blizzard (ABK) for $68.7 billion not only reaffirmed the size of the video game industry but also prompted competition authorities around the world to take action[2].

    The competition authorities in Saudi Arabia[3], Brazil[4] and Serbia[5] approved the acquisition without any reservations. On the other hand, the takeover is under scrutiny by the competition authorities in Japan[6] and Australia[7]. Moreover, the investment has come under intense scrutiny in the United States of America (USA)[8] and the United Kingdom (UK)[9]. In fact, in the US, the Federal Trade Commission (FTC) has taken on the task of examining the acquisition directly, issuing a press release[10] expressing concerns that such an acquisition would harm consumers and give Microsoft too much control over certain parts of the industry, such as cloud gaming. A similar problem was expressed by the UK Competition Authority (CMA)[11]. At this point, the CMA's review (Decision) is essential. Compared to other competition authorities, the CMA started its review much earlier (July 2022) and conducted the most comprehensive inspection.

    This study is composed of three parts parallel to the CMA's review. In the first chapter, I will briefly discuss the importance of Activision Blizzard, and thus the significance of this acquisition industry is in line with the CMA's review. I will emphasise the CMA's review in the second chapter and assess the subject in the last chapter.

    The Gaming Industry and Changes: Possible Effects Of The Takeover And Reflection On The CMA Decision

    One of the most prominent players in this market, of which billions of dollars are spoken today, is undoubtedly Activision Blizzard, both in terms of its revenues[12] and the brands it owns[13]. The CMA's Decision also emphasised this issue and pointed out that Activision Blizzard creates the most popular game content in the world[14]While there are many enterprises in such a large market, the major suppliers, especially in the console market, are Sony (PlayStation), Microsoft (Xbox) and Nintendo[15]Microsoft is one of the biggest names in the tech world, with global revenue of approximately $168 billion in the 2021 financial year[16].

    Microsoft offers a wide range of products and services, summarised in the Decision[17]: Windows OS, Azure (Cloud System), Xbox Cloud Gaming, Xbox, Xbox Game Studios, Digital Distribution, and Gaming Subscription Services. Due to the improvement of the Internet infrastructure and technological developments in the field of hardware, it has become easier to access all kinds of content without a physical device (e.g. DVD), and downloading large-scale games through online platforms has become the standard of the industry. Today, however, the gaming industry is evolving. There are two aspects to this evolution[18]:

    a.   Cloud gaming: An internet-based technology that enables games that require high-end hardware to be played even on low-end devices.

    b.   Gaming subscription services: The "buy-to-play" model is being slowly abandoned today. Since games are sold at a fixed price, the sales costs cannot cover the development and publishing expenses. On the other hand, subscription services provide players with a catalogue/game library in exchange for payment over a specified period.

    While the industry is in such a state of change, the Decision makes introductory remarks on the effects of Microsoft's acquisition of Activision Blizzard. It refers to this acquisition as a game-changing merger[19].

    The CMA Review

    The importance of Activision Blizzard's game repertoire is visible at this point. In particular, the Call of Duty series, one of the most popular video game franchises, was emphasised. The CMA pointed out that this brand could significantly impact rival gaming platforms' success. In this context, the CMA exemplified potential behaviours such as making the CoD series exclusive to Xbox or postponing its release to other consoles. The competition between Microsoft and Sony might weaken, especially considering the next console generation.

    Also, Microsoft's infrastructure should be emphasised in terms of cloud gaming technology. As a technology giant, Microsoft already has an extensive cloud infrastructure. In addition, having an operating system like Windows, on which most of the games played on computers run, puts Microsoft in a more advantageous position in cloud gaming. In terms of acquisitions, if a company already strong in the cloud gaming industry acquires a company with one of the most substantial catalogues in the video game industry, it would make Windows's current and potential advantage almost unattainable[20].

    In the relevant section of the Decision, the CMA took a counterfactual approach, assessing the impact of a merger against the situation that would have prevailed in the absence of the merger, noting that the relevant counterfactual was the prevailing competition conditions, but also taking into account the dynamic nature of the gaming industry[21].

    On a product scope basis, while the CMA recognises that the purchase of a gaming device such as a console is a costly investment, it considers that the most crucial aspect of competition in this dispute is for the next generation of consoles, where customers will make new choices about which console to purchase. Regarding cloud gaming, it was stated that this dynamic area is still evolving, and its exact boundaries may change as the market develops. Due to the development of cloud technology, hardware limitations may lose their importance in the future.

    The CMA also focused on two "theories of harm" (TOH) as part of the first stage review. Theories of harm explain why a particular type of conduct constitutes a breach of competition law regarding the relevant legal tests and why that conduct causes harm to competition that should be prohibited[22]. The theories of harm addressed in the Decision are as follows:

    a.   TOH1a Input foreclosure of rival console gaming platforms (excluding multi-game subscription services)

    b.   TOH1b Input foreclosure of rival multi-game subscription services

    c.   TOH2 Foreclosure of cloud-gaming service providers through leveraging Microsoft's ecosystem

    As a result of the theories of harm, the CMA believes that the acquisition raises a realistic prospect of a "substantial lessening of competition" in gaming consoles (together with their digital stores), multi-game subscription services and cloud gaming services. Therefore, the CMA referred the acquisition to the second stage on the basis of Article 33(1) and Article 34ZA(2) of the Enterprise Act 2002[23].

    Assessments and Conclusion

    The fact that video games have become a vast industry has led to the emergence of its dynamics. Video games, which have reached a new stage with almost every technological development, are in a very different position due to their dynamic structure. Hence, to objectively evaluate the issue from the perspective of competition law, it is essential to be familiar with both the gaming world, technological developments and competition law.

    The investigation conducted by the UK Competition Authority regarding the Microsoft / Activision Blizzard acquisition contains all the elements mentioned above. In this review of the effects of the acquisition, the statements regarding the gaming world are accurate, and the predictions regarding the impact of technological developments on the gaming world are pretty realistic. In addition, the idea of keeping competition intact has always been prioritised.

    In this context, the UK Competition Authority focused on multiplayer subscription services, cloud gaming technology and the future of this technology, whether the content offered by Activision Blizzard will be accessible on competing consoles, and concluded that the issue requires a more in-depth examination. This is the right thing to do because even a slight decrease in competition in such a large sector can have negative consequences for players who digest the realities of life in the virtuality of games.


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    • Zenger, H; Walker, M.: ''Theories of Harm in European Competition Law: A Progress Report'', 22 February 2012, (Online), 22.01.2023.

    [1] Microsoft to acquire Activision Blizzard to bring the joy and community of gaming to everyone, across every device, <>, 22.01.2023.; (Online)  Why Microsoft is splashing $69bn on video games, <>, 22.01.2023.; (Online) Microsoft to buy Activision Blizzard for $68.7 billion, <>, 22.01.2023.; (Online) Microsoft to buy Activision in $68.7 billion all-cash deal, <>, 22.01.2023.

    [2] (Online) Microsoft’s Activision Blizzard deal gets global scrutiny, <>, 22.01.2023.; (Online) EU wants to know if Microsoft will block rivals after Activision deal, <>, 22.01.2023., ayrıca bkz: <>.;  (Online) FTC likely to file lawsuit to block Microsoft bid for Activision-Politico, <>, 22.01.2023.

    [3] Saudi Arabia approves Microsoft’s Activision Blizzard Acquisition, <>, 22.01.2023.

    [4], 22.01.2023.

    [5], 22.01.2023.

    [6], 22.01.2023.

    [7], 22.01.2023.

    [8] (Online) Microsoft Deal for Activision to Be Reviewed by FTC in U.S., 22.01.2023.

    [9] (Online) Microsoft Activision Deal Could Lead to Competition Concerns,, 22.01.2023.;, 22.01.2023.

    [10], 22.01.2023.;

    [11]See footnote 8.


    [13] Call of Duty (CoD), World of Warcraft, Diablo, StarCraft, Overwatch, Candy Crush Saga, Guitar Hero, etc. At this point, CoD deserves a special attention. Due to its popularity, it has become one of the reasons for competition authorities to examine the acqusition.

    [14]See Decision, para. 14-15.

    [15] In the context of this acquisition, even Nintendo can be positioned differently from Sony and Microsoft. Indeed, in terms of both hardware and player base, Nintendo has charted a "unique" path (See Decision, para 28). Moreover, the existence of strong network effects is cited as the reason why it is difficult to enter and grow in this market. The term "network" is not used in a technical sense, such as an internet connection, but in the sense of multiple players being able to act together and thus have better content (See Decision, para 5).

    [16] See: In the CMA Decision, it is stated as £125 billion (See Decision, para. 36.)

    [17]See Decision, para. 37.

    [18]See Decision, para. 58.

    [19]See Decision, para. 23 ff.

    [20]Decision, para. 33.

    [21] See Decision, para. 51-55. Indeed, the parties stipulated that games are the fastest growing segment of the media and entertainment industry, with revenues already larger than those of movies, music, books and magazines, also see Decision, para. 56.

    [22]; Hans Zenger, Mike Walker, ‘’Theories of Harm in European Competition Law: A Progress Report’’, 22 February 2012, (Online), 22.01.2023.

    [23]See Decision to refer, para. 6.:


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