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Tag: Competition and Markets Authority

  • The UK’s antitrust regulator will keep a closer eye on Google Search

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    The UK’s Competition and Markets Authority (CMA) has officially designated Google with strategic market status (SMS) under the new digital markets competition regime. Specifically, it found that Google holds “substantial and entrenched market power and a position of strategic significance” when it comes to general search and search advertising services. The digital markets competition regime came into force on January 1, 2025 and will enable the agency to “promote competition in fast-moving digital markets, while protecting UK consumers and businesses from unfair or harmful practices by the very largest technology firms.”

    So what does getting the “strategic market status” designation mean, exactly? As the CMA clarifies, it doesn’t automatically mean Google did something wrong, but it does allow the agency to launch interventions that ensure general search services in the UK are “open to effective competition” and that businesses relying on Google are being treated fairly. The company is expecting to face new rules and regulations on how Search works in the near future. UK’s CMA launched an investigation on Google’s standing in the search industry on January 14 to confirm its status.

    “We have found that Google maintains a strategic position in the search and search advertising sector – with more than 90% of searches in the UK taking place on its platform,” said Will Hayter, Executive Director for Digital Markets at the CMA. To be clear, the designation applies to the company’s AI Overviews and AI Mode features, as well, but not to its Gemini AI assistant, at least for now.

    The CMA said it’s expecting to start consulting on possible interventions later this year. In an announcement of its own, Google said that “many of the ideas for interventions that have been raised in this process would inhibit UK innovation and growth, potentially slowing product launches at a time of profound AI-based innovation.” The company believes that some of those ideas would “pose direct harm to businesses” and could lead to higher prices for consumers.

    “The UK enjoys access to the latest products and services before other countries because it has so far avoided costly restrictions on popular services, such as Search. Retaining this position means avoiding unduly onerous regulations and learning from the negative results seen in other jurisdictions, which have cost businesses an estimated €114 billion,” Google wrote. By “other jurisdictions,” Google means the European Union, whose similar Digital Markets Act law designated the company as a gatekeeper in 2023.

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    Mariella Moon

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  • Activision Set To Become Part Of Microsoft After FTC’s Last-Ditch Effort Fails

    Activision Set To Become Part Of Microsoft After FTC’s Last-Ditch Effort Fails

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    Photo: Anadolu Agency (Getty Images)

    The U.S. Ninth Circuit Court of Appeals has denied the Federal Trade Commission’s final request to pause Microsoft’s takeover of Activision Blizzard, likely paving the way for the biggest-ever merger in gaming to finally move forward after a more than year-long regulatory saga.

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    The FTC had sought to have the acquisition kept on hold ahead of a July 18 deadline while appealing a ruling from the Northern District of California that sided with Microsoft. It was the antitrust agency’s last chance to stop the historic $69 billion merger that would see major gaming franchises like Call of Duty, World of Warcraft, and Candy Crush all become an extension of Xbox.

    Regulators argued that the federal court had ignored evidence that Microsoft would have reasonable incentive to potentially make those franchises exclusives to its console and cloud gaming platforms in order to corner the market. Microsoft in turn blamed the FTC for using delay tactics and underselling a massive $3 billion breakup fee Microsoft would have to pay to Activision if the deal ended up not going through for some reason.

    The Ninth Circuit will still handle that appeal, but denied the FTC’s motion to block the merger until that ruling was made, giving Microsoft the greenlight to close its deal on July 17.

    It’s been a long journey up to this point, full of twists and turns, including abroad in the UK, the only country to block the deal so far. That country’s Competition and Markets Authority (CMA) had denied the merger on the grounds that it would give Microsoft too much of an advantage in the nascent market of cloud gaming.

    Following the FTC’s initial court defeat earlier this week, however, the CMA announced it was back negotiating with Microsoft over new ways to resolve the antitrust conflicts. It’s now extended its final deadline for approval of the deal into August, suggesting it’s prepared to accept the tech giant’s latest concessions.

    While nothing’s final until it’s final, it now looks like Microsoft’s shocking acquisition of one of the biggest game publishers in the world is about to become a reality, and will soon have the potential to completely reshape the video gaming landscape in the process. Or maybe Xbox owners will just get a bunch more free games on Game Pass. Time will tell.

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    Ethan Gach

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  • UK Blocks Microsoft Activision Deal Over Game Pass

    UK Blocks Microsoft Activision Deal Over Game Pass

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    The UK’s Competition and Markets Authority (CMA) announced its decision to block Micorosft’s $69 billion acquisition of Activision Blizzard on Wednesday citing concerns it would hurt competition in the growing cloud gaming market where Microsoft dominates thanks to Game Pass. It’s a shocking turn of events for what seemed like a mega merger that was otherwise cruising toward regulatory approval.

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    “We have concluded that the merger would result in the most powerful operator in the fast-developing market for cloud gaming, with a current market share of 60-70%, acquiring a portfolio of world-leading games with the incentive to withhold those games from competitors and substantially weaken competition in this important growing market,” the CMA wrote in its final report. Both Microsoft and Activision Blizzard said they will appeal the decision.

    One seemingly likely result of Microsoft buying Activision Blizzard would be that the latter’s hit games like Overwatch 2, Diablo IV, and Call of Duty: Modern Warfare II would all get added to Game Pass. The CMA argues this would give Microsoft, already the market leader in cloud gaming, even more anti-competitive control. It also suggests that the company would then have an incentive to raise prices on cloud gaming subscription services like Game Pass, while potentially withholding certain releases from some rival platforms like Sony’s PlayStation Plus.

    Read More: Everything That’s Happened In The Microsoft-Activision Merger Saga

    Microsoft tried to assuage these concerns in recent months by signing tons of deals with smaller cloud computing providers in the UK, promising to make Activision Blizzard’s games available through them alongside its own xCloud service. The CMA seemed unswayed by these overtures, however, calling Microsoft’s proposed remedies too limited in scope, implying they would leave out competing services like Sony’s and that enforcing the agreements would require too much ongoing regulatory oversight.

    “We have already signed contracts to make Activision Blizzard’s popular games available on 150 million more devices, and we remain committed to reinforcing these agreements through regulatory remedies,” Brad Smith, Vice Chair and President at Microsoft, said in a statement. “We’re especially disappointed that after lengthy deliberations, this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works.”

    Activision’s response to the news was more harsh. “The CMA’s report contradicts the ambitions of the UK to become an attractive country to build technology businesses,” a spokesperson wrote in a statement. “We will work aggressively with Microsoft to reverse this on appeal. The report’s conclusions are a disservice to UK citizens, who face increasingly dire economic prospects. We will reassess our growth plans for the UK. Global innovators large and small will take note that— despite all its rhetoric—the UK is clearly closed for business.”

    That language echoed Activision CEO Bobby Kotick’s previous claims that the UK would become “death valley” if it torpedoed the deal, which promises huge financial windfalls for him and other executives at the company. The merger is still being investigated by authorities in the European Union, who are expected to announce a decision in May, and the Federal Trade Commission is currently threatening the acquisition with an antitrust lawsuit. It’s unclear how the CMA’s initial surprise ruling could affect approval in the U.S. and EU as a result, since failure in any one of the regions could likely doom it.

             

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    Ethan Gach

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  • Microsoft Just Overcame A Major Hurdle Blocking The Activision Deal

    Microsoft Just Overcame A Major Hurdle Blocking The Activision Deal

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    Microsoft’s $69 billion deal to buy Activision Blizzard inched closer in a big way on Friday. UK regulators announced a provisional finding that the acquisition wouldn’t harm competition, despite previously suggesting the Xbox maker might need to spin-off the Call of Duty business to get the sale approved.

    The UK’s Competition and Markets Authority was initially skeptical of Microsoft’s promises to keep the military shooter available on PlayStation consoles for many years to come, arguing it could have a financial incentive to pull the blockbuster series from the platform in the future. The CMA now says that after receiving more detailed information about Call of Duty player spending, it’s clear that making the series exclusive to Xbox would lose Microsoft a ton of money.

    “The CMA inquiry group has updated its provisional findings and reached the provisional conclusion that, overall, the transaction will not result in a substantial lessening of competition in relation to console gaming in the UK,” it wrote in a press release. The CMA continued:

    While the CMA’s original analysis indicated that this strategy would be profitable under most scenarios, new data (which provides better insight into the actual purchasing behaviour of CoD gamers) indicates that this strategy would be significantly loss-making under any plausible scenario. On this basis, the updated analysis now shows that it would not be commercially beneficial to Microsoft to make CoD exclusive to Xbox following the deal, but that Microsoft will instead still have the incentive to continue to make the game available on PlayStation.

    The CMA is still reviewing Game Pass

    The regulatory agency is still investigating the cloud gaming side of the deal, with its final verdict/decision still not due out until 26 April. Call of Duty seemed to be the biggest sticking point in the CMA’s skepticism of the deal, however, and Microsoft seems to have now tentatively assuaged those fears. It’s also been busy shoring up its defense on the cloud gaming front by striking deals with several smaller competitors to guarantee its first-party games will be available on other services if the deal goes through.

    One big question that remains is what a final deal between Microsoft and Sony will look like. An Activision spokesperson had previously claimed that Sony Interactive Entertainment CEO Jim Ryan was unwilling to negotiate, stating his only objective was to permanently kill the acquisition. As that outcome becomes increasingly unlikely, the PS5 manufacturer will seemingly have no alternative but to hammer out the details of Microsoft’s 10-year Call of Duty proposal.

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    Determining the availability of Activision Blizzard games like Diablo IV and an upcoming Black Ops sequel on Game Pass competitor PS Plus will be a key part of that. In its latest argument to the CMA pushing back on Sony’s concerns, Microsoft went so far as to suggest that 10 years would be plenty of time for it to go make its own Call of Duty competitor if it was so concerned about losing it.

    In the meantime, Microsoft still needs to get approval from European regulators and deal with an antitrust lawsuit by the Federal Trade Commission. But investors seem more hyped for the deal than they’ve ever been. Activision Blizzard’s stock price shot up to $85 a share following the CMA’s latest announcement, more than at any point since the acquisition was announced.

    It’s the most the company has been worth since it was sued for alleged widespread sexual harassment and discrimaiton.

        

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    Ethan Gach

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