Yesterday, Bobby Kotick gave two interviews to CNBC and the Financial Times, in which the longtime CEO of Activision Blizzard made typically bullish remarks about Microsoft's proposed $68.7 billion acquisition of the publisher (opens in new tab ) Kotick pointed to comments by British Prime Minister Rishi Snack that the U.K. would become the "Silicon Valley of Europe," and warned that "if such a deal doesn't go through, [the U.K.] will become Death Valley, not Silicon Valley." And he said that UK regulators "lack independent thinking."

That's good. With perfect timing, the UK's Competition and Markets Authority (CMA) today released its preliminary findings on the deal (opens in new tab), and the CMA's biggest problem is that the merger would make Microsoft big enough in cloud gaming to stifle competition and weaken the PlayStation and Xbox rivalry, which could harm consumers and "lead to higher prices, less choice, and less innovation for UK gamers."

This is the result of a five-month investigation by the CMA, during which it visited various studios and stakeholders, discussed with the leadership of Microsoft and Activision Blizzard, analyzed "over 3 million internal documents from the two companies," surveyed UK gamers, and obtained evidence from competitors that collected.

When it comes to cloud gaming, the CMA's concern is quite simple: Microsoft believes that "it would be commercially profitable to make Activision's games exclusively available on its own cloud gaming service or only on other services with worse conditions." The CMA estimates that Microsoft already accounts for 60-70% of the world's cloud gaming services, because it has a large and multi-faceted infrastructure behind it. In other words, the CMA is saying that if this deal goes through, it could rubber-stamp the monopoly.

The CMA focused on Call of Duty, as it has from the beginning. Microsoft tried to dispel these concerns by offering something like the much lauded 10-year contract to continue offering the series on PlayStation, but as the CMA correctly pointed out in October 2022, contracts can be broken and promises can be broken There are. While there is seemingly nothing unusual about making the series exclusive, there is this line that translates to "We don't believe you": "The CMA's tentative findings indicate that this strategy of acquiring a game studio and making its content exclusive to Microsoft's platforms strategy has been used by Microsoft on several occasions in the past when it has acquired game studios.

"There are an estimated 45 million gamers in the UK, and people in the UK spend more on gaming than any other form of entertainment, including music, movies, TV and books," said Martin Coleman, chairman of the independent expert panel conducting the study. 'Our job is to ensure that UK gamers are not caught in the crossfire of global trade, which in the long term could undermine competition, leading to higher prices, less choice, and less innovation. We tentatively find that this may be the case here."

The CMA has sent the findings and explanations to the companies involved, asking for their input and alternatives and for their response to the tentative findings by March 1. It will then take into account all the findings and submit a final report by the auspicious date of April 26, 2023.

What may be troubling to litigators here is that, unlike some other jurisdictions that wave things around, the UK has a relatively robust market regulator that can cause essentially endless problems if it so chooses... "Can the CMA actually stop this Can the CMA actually stop this deal?"

While that remains unlikely, the concern for Kotick is how much attention the other big regulators are paying to this and whether they too will decide to get into the fray.