Even as this deal seems set to close, new competition investigations seem set to begin, this time vs Sony.
The New York Post reports that Microsoft intends to finish their acquisition deal for Activision Blizzard King regardless of what the FTC does.
The Post has their own sources within Microsoft confirming this for them. They even have one of those sources going on record that “They are going to cram this down the FTC’s throats.”
As we have been reporting ourselves for some time now, Microsoft saw the CMA as the most important regulator to sway to approve the deal, over the EU and the FTC. This is not because the UK market the CMA has jurisdiction on is more important than the EU, or the US, which is arguably the biggest market for video games.
Instead, it’s because of the rules that these respective regions have in relation to their competition regulation. The CMA was the only regulator that offered no legal recourse for Microsoft to request to approve the deal again if it gets rejected.
So, if the EU turns out to reject the deal alongside the FTC, it will be a huge setback, but it will not be a literal dealbreaker. Microsoft and Activision can still go through legal processes in their respective regions to appeal and get their request reconsidered again.
As things stand now, the UK CMA is expected to approve the deal, with the possibility that they make some extra demands to ensure fair competition in the cloud gaming market. They have already rejected the idea that the deal will be a serious threat to competition in the console gaming market.
On the FTC’s end, we are still awaiting any new developments leading up to the first scheduled hearings for August 2023. FTC administrative law judge Michael Chappell will be hearing the case the Lina Khan-led FTC filed, suing to stop the merger from happening.
Lina Khan has been under fire for her decisions on this particular matter. We had recently reported that she was asked by a sitting US senator, on why she was siding with Japanese company Sony in getting the deal between Microsoft and Activision, both US companies, rejected.
In fact, Sony’s own actions in regards to this deal have themselves drawn the attention and ire of members of the US government. It started with Senator Maria Cantwell asking U.S. Trade Representative Katherine Tai in a House Committee hearing to have Sony’s practices investigated under the purview of the Indo-Pacific Economic Framework.
And then, separate letters coming from GOP and Democrat Congresspeople were sent to Rep. Tai and Commerce Secretary Gina Raimondo, formally requesting the same investigation.
Most recently, Senator Kevin Cramer sent a letter to Sony themselves, requesting information for his own independent investigation into the matter.
This investigation has shifted from the Microsoft – Activision deal itself, to Sony’s practice of paying for third party games to be exclusive to PlayStation. But this investigation probably would not have come about if Sony themselves hadn’t drawn attention to it. Unintentional as it is, the arguments Sony made about the potential for market domination turned around on the company, which is the market leader in comparison to Microsoft.
And so, even as multiple observers state their belief that CMA will approve the deal, new competition investigations seem to be starting, that could also have serious consequences for the video game industry. Possibly even more than the Microsoft – Activison deal itself.