Microsoft + Activision Blizzard Deal Now Under Scrutiny by UK’s CMA

Sony Microsoft Activision Blizzard FTC

Today, the UK's Competition and Markets Authority (CMA) has officially opened an inquiry into the planned Microsoft + Activision Blizzard deal, announced earlier this year and worth nearly $70 billion.

The Competition and Markets Authority (CMA) is considering whether it is or may be the case that this transaction, if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

To assist it with this assessment, the CMA invites comments on the transaction from any interested party.

The CMA expects comments from the interested parties (Microsoft and Activision Blizzard) by July 20th at the latest. The UK-based authority will decide whether to open a more in-depth Phase 2 investigation on September 1st.

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On the US side, the Federal Trade Commission (FTC) has been reviewing the case at least since early March, when both Microsoft and Activision Blizzard received a request for additional information and documentary material. A few weeks later, we learned of four US senators (Elizabeth Warren - Massachusetts, Bernie Sanders - Vermont, Cory Booker - New Jersey, and Sheldon Whitehouse - Rhode Island) pushing for the FTC to dig deeper into the deal.

In June, senator Elizabeth Warren publicly shared her response from FTC chair Lina Khan, a notorious critic of big tech.

Thank you for your March 31, 2022 letter to the Federal Trade Commission (“FTC” or
“Commission”) regarding the potential employee impact of the proposed acquisition of
Activision Blizzard, Inc. by Microsoft.

I share your concern that monopsony power in labor markets may enable firms to harm
workers in a host of ways, including through undermining their rights and dignity. Although
antitrust law in recent decades generally has neglected monopsony concerns and harms to
workers, I strongly believe that merger investigations must scrutinize the impact on labor
markets.

Given that Activision disclosed in a March 21, 2022 securities filing that the FTC is conducting a review of the proposed transaction, I am able to confirm that the FTC is
investigating the proposed merger.

Meanwhile, the overwhelming majority of Activision Blizzard shareholders voted in favor of the merger. Two months ago, Microsoft was confident that the acquisition was moving rather quickly considering its size. The company has also recently signed a labor neutrality agreement with the Communications Workers of America, which prompted the CWA to sign a letter backing the deal.

As a reminder, should the deal not go through, Microsoft will have to pay Activision Blizzard 2-3 billion US dollars.

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