Following the precedent set by the UK Competition and Markets Authority (CMA), the EU is moving forward with Phase 2 investigations over Microsoft’s acquisition of Activision Blizzard.
As we had previously explained, the UK CMA already went forward with Phase 2 investigations from last month. Both the EU and UK regulatory bodies started with Phase 1 investigations. They started off by checking if there would be any issues with antitrust and competition as a result of the acquisition.
When these regulators move forward to Phase 2, they have already concluded that there are possible issues with competition, and so they have to investigate the finer details, to determine if they should stop the acquisition from going through.
When the UK moved forward to Phase 2 investigations, Microsoft released a statement complaining that the CMA merely accepted all of Sony’s arguments, and that if they had taken Microsoft’s arguments properly they should not have even gone forward. But today, Microsoft has changed their tune.
This time, Microsoft has not given any comment to the EU at the end of their Phase 1 investigations, which prompted the EU to move forward to Phase 2 themselves. In this window, Microsoft could have reiterated the arguments that they made in front of the CMA to stop investigations altogether. Notably, Microsoft chose to not act at all, allowing the clock to run out on that opportunity.
This may reflect a complete change of tune in the company about the acquisition, that really starts at leadership and trickles down to their employees.
Phil Spencer was positive about the investigation last August. He pointed out that he understood why regulators needed to ask the hard questions, and that he was feeling good about the progress that was made,
Later, Satya Nadella, the CEO of Microsoft himself, said that he was very confident that the acquisition would be approved and finalized. He made the argument that Microsoft’s position in the video games market could arguably pit them as the underdog vs companies like Sony and Tencent, even Nintendo.
Jump to recently, where Phil stated that he believed the CMA”s scrutiny of the deal was ‘fair and warranted’ and that he was very much confident the deal would push through.
So where is Microsoft finding this confidence? It’s possible that they simply, and sincerely, believe their arguments that their acquisition will not harm competition, and will in fact improve the competition in the video game industry.
As Satya himself also argued, after the acquisition pushes through, Microsoft will still be number three among the video game hardware companies. It’s an expression of good faith, that they do not intend to dominate the industry afterwards.
Of course, there’s still the pernicious issue of Sony’s complaints about Call of Duty. Microsoft seems to believe that regulators will see this situation, and still come out of it approving the deal. At the end of the day, Microsoft believes we will eventually just move forward after all the investigation is over. It will certainly be interesting if their prediction proves true.
Source: Politico
