Microsoft's acquisition of Activision Blizzard hits stumbling block

The $69B acquisition of Activision Blizzard by Microsoft has hit a hurdle in the United Kingdom as it undergoes necessary regulatory reviews.

The obstacle: The deal was never going to be plain sailing for the companies.

• The Competition and Markets Authority (CMA) in the United Kingdom has concluded the first phase of its investigation.
• It's decided that the prospective acquisition requires extra scrutiny as it may be anti-competitive in terms of the nation's gaming industry.
• More specifically, the government department is concerned that Xbox owner Microsoft could harm rivals by refusing access to Activision Blizzard titles. It also noted that Microsoft's cloud gaming service, in tandem with control over AB's games, could be damaging to the market.

What's next? The CMA has laid out the next steps.

• Microsoft and Activision Blizzard have been given five days to submit proposals that they feel address the concerns highlighted by the CMA.
• "If our current concerns are not addressed, we plan to explore this deal in an in-depth Phase 2 investigation to reach a decision that works in the interests of UK gamers and businesses," said Senior Director of Mergers at the authority.
• Should the investigation progress proceed into a second phase, the CMA would appoint an independent panel to dig deeper into the potential transaction to evaluate whether a "substantial lessening of competition" would or would not occur should the acquisition go through.

The response: The CEOs of both Activision Blizzard and Microsoft Gaming have commented.

• In a letter from Bobby Kotick to Activision Blizzard employees, which has been published online, the CEO said that "the process with all of the regulators is generally moving along as we expected" and that "government regulators are taking appropriate and deliberate steps to better understand our industry."
• Phil Spencer gave his perspective as the leader of Microsoft Gaming, explaining that the company will continue to "enable people to play with each other across platforms and across devices." As expected, the company will "continue to engage with regulators with a spirit of transparency and openness as they review this acquisition" with a view of getting the record acquisition over the line.