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HomeTechExplainer: How Microsoft is addressing antitrust concerns over Activision deal

Explainer: How Microsoft is addressing antitrust concerns over Activision deal

Microsoft has thrown the gauntlet down over antitrust criticisms, saying on Tuesday it is ready to offer rivals licensing deals in exchange for regulatory approval of its $69 billion deal to purchase video game publisher Activision, but it would not to sell the latter’s lucrative “Call of Duty” franchise.

What is the Activision deal?
Microsoft announced the Activision bid in January last year, its biggest ever, to boost its firepower in the booming videogaming market and take on leaders Tencent and Sony, and lay the base for its investment in metaverse, digital spaces which are made more lifelike by the use of virtual reality (VR) or augmented reality (AR).

What do antitrust regulators say?
In December, the U.S. Federal Trade Commission (FTC) asked a judge to block the deal, saying it would give Microsoft’s Xbox exclusive access to Activision games and leave out Sony’s Playstation and Nintendo consoles.

The UK competition agency CMA has suggested divesting Call of Duty to address its concerns while the European Commission has warned Microsoft about the possible anti-competitive impact of the deal.

Who are the critics and fans of the deal?

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Market leader Sony wants the deal to be blocked. A group of 10 gamers in the United States has filed a private consumer antitrust lawsuit over the deal.

The European Games Development Federation, with more than 2,500 game studios in 22 European countries, and the UNI Global Union back the acquisition.

What has Microsoft president said and offered?
Microsoft President Brad Smith said he doesn’t think “it is feasible or realistic to think that one game or one slice of this company (Activision) can be carved out and separated from the rest” and that he doesn’t “see a viable path to sell the Activision studio for the quality of the game to someone else.”

Smith said the CMA has a choice to either kill the deal and cement Sony’s 80% market share in Europe or clear it with behavioural remedies such as the licensing deals with Nintendo and Nvidia that will bring Call of Duty to 150 more million people.

What are the Nintendo and Nvidia licensing deals?
Both companies have signed 10-year licensing deals that will bring Call of Duty to their gaming platforms but these are conditional on the Activision deal being approved.

Will Microsoft’s tactic work?
Behavioral remedies like licensing deals are a hard sell for the CMA which flexed its muscles in 2021 when it ordered Facebook owner Meta to sell animated-images platform Giphy after the deal had been completed.

The European Commission could be more open to such remedies if they can allay their concerns, but it is still too early to tell.

Who has given the green light so far?
Brazil, Chile, Serbia and Saudi Arabia have given unconditional approval.

What next?
The EU antitrust enforcer’s decision is due by April 11 but the deadline can be extended depending on when remedies are offered.

The CMA has given Microsoft until 1700 GMT Feb. 22 to comment on possible remedies, with a response hearing possible by early March, final submissions and responses in March and April 26 for a final report.

Microsoft’s Smith said the company would fight the FTC’s request to block the deal.

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