UK and EU Take Up Arms, Launch In-Depth Investigation into MS-Blizzard Acquisition

[Asia Economy Reporter Yujin Cho] Regulatory authorities in the UK and the European Union (EU), who are examining whether Microsoft's (MS) acquisition of Activision Blizzard constitutes an 'antitrust' issue, are intensifying their investigations.

According to major foreign media on the 14th (local time), the UK Competition and Markets Authority (CMA) will begin an in-depth investigation into the MS and Blizzard merger this week. Multiple sources familiar with the matter reported that since MS has not proposed any remedies to resolve antitrust concerns at this stage, an in-depth investigation is inevitable.

After announcing the merger between MS and Blizzard, the CMA, which began a preliminary investigation in July, recently concluded its inquiry and notified MS to prepare corrective measures addressing antitrust behavior and market competition reduction within five days.

MS is also facing an investigation by EU competition authorities. An EU competition official stated that considering the scale of this acquisition deal, the dominant market positions of both companies, and concerns from competitors including Sony, the investigation is expected to take a considerable amount of time.

The EU competition official said, "(MS's acquisition of Blizzard) is a large and complex deal that requires a comprehensive investigation." However, they added that if MS files a lawsuit against this investigation, there is a possibility that the EU's investigative process could be delayed.

Earlier this January, MS completed the largest M&A in the information and communication technology (IT) industry by acquiring Blizzard for $68.7 billion. With this acquisition, Blizzard rose to become the world's third-largest game company by revenue, following China's Tencent and Japan's Sony.

MS aims to complete the deal by June next year but must obtain approval from competition authorities in major markets including the EU, the UK, the US, New Zealand, and South Korea. Given that this deal took place amid a global wave of antitrust regulations targeting big tech, it is expected that removing regulatory hurdles will not be easy.

The core issue of this deal is whether the merger between the two companies constitutes an abuse of monopoly power in the game distribution market. MS, which has enjoyed a monopoly position in the PC market, expanded its business into the gaming industry by launching the 'Xbox' console game in 2001.

As a latecomer in the gaming market, MS pursued aggressive M&A strategies to increase its market share, and by acquiring the gaming giant Blizzard, it has risen to stand shoulder to shoulder with China's Tencent and Japan's Sony as a major gaming company. Consequently, concerns have been raised in the market that MS might use its PC market dominance to disrupt fair competition with rival companies.

Competitors are wary that MS could abuse its market position by exclusively releasing blockbuster Blizzard games on its game subscription service 'Game Pass' and blocking other game companies from entering platforms like Wii and PlayStation.

In response, MS stated that popular games such as 'Call of Duty' will not be converted into Xbox-exclusive titles and will remain available on other companies' consoles, including Sony's PlayStation.