The UK Competition and Markets Authority says that if Microsoft is serious about acquiring Activision Blizzard, there is one sure way to do it: break up Activision Blizzard.
The bold suggestion came in a new “notice of possible remedies (opens in a new tab)update, a procedural document that outlines the CMA’s concerns and possible ways Microsoft and Activision Blizzard could address them.
There are two types of “remedies” available in situations like this, the AMC said: structural, which alter the terms of the proposed deal, and behavioral, in which the parties involved actually promise to be good at it. exchange of permission to do anything. They want. In merger situations, the AMC prefers structural solutions because they “rarely require oversight and enforcement” – once they’re done, there’s no going back, you don’t have to. so you don’t have to worry about getting screwed three or four years later.
In the case of the Activision Blizzard acquisition, the CMA cited two possible structural remedies:
- (a) Require a partial assignment from Activision Blizzard, Inc. This may be:
(i) Disposal of the business associated with Call of Duty;
(ii) Divestiture of the Activision segment of Activision Blizzard, Inc. (the Activision segment), which would include the Call of Duty-related business;
(iii) Divestiture of the Activision segment and the Blizzard segment (the Blizzard Segment) of Activision Blizzard, Inc., which would include businesses associated with Call of Duty and World of Warcraft, among other titles.
- (b) Prohibition of Merger.
This means, basically, that the CMA will greenlight the deal if Activision Blizzard sells or spins off any part of the company or its holdings so that Microsoft doesn’t take control of the entire package during the acquisition. This would be a major milestone, and given that all of Activision Blizzard’s divisions have significant value – Call of Duty, King mobile games, pretty much everything Blizzard does and a huge back catalog are all very lucrative components of all – one that Microsoft will probably be reluctant to take.
Activision isn’t very interested in the plan either. “CMA’s proposals do not represent final decisions for the deal,” an Activision Blizzard representative said in an email to PC Gamer. “Microsoft now has the opportunity to make its case on the way forward. We already know they want to keep Call of Duty available on all platforms.
“We look forward to addressing AMC’s concerns and are confident that this agreement is good for gamers and good for competition in the gaming industry… We hope that by April we can help AMC to better understand our industry to ensure they can achieve their stated mandate.
As Activision Blizzard said, the CMA’s opinion is by no means a final decision, but “is intended to serve as a starting point for discussion” between the CMA, Microsoft, and Activision Blizzard. But the announcement of a breakup appears to be a tipping point: divestment is not a particularly rare response when proposed mergers run into regulatory hurdles (the U.S. Federal Trade Commission has a complete guide on this (opens in a new tab)), but as far as I know, this is the first time the Activision Blizzard split has been offered. Will Microsoft still be interested in the deal if it has to drop Call of Duty or World of Warcraft to make it happen? I don’t know, but I do know this: if the CMA is thinking about the idea, you can bet the FTC is thinking about it too.
Despite the CMA’s seemingly growing resistance to the proposed merger, Activision Blizzard CEO Bobby Kotick doesn’t seem interested in adopting a conciliatory tone. In a recent interview with CNBC, he accused regulators of missing “independent thinking (opens in a new tab) “and warned that if the deal is not approved, the UK” will not be Silicon Valley, [it’ll] to be the valley of death.