UK’s CMA Can’t Properly Block Microsoft – Activision Deal, Analyst Argues

Microsoft's acquisition deal with Activision seems to have a chance to pull through UK regulation.

Wedbush Securities analyst Michael Pachter recently mentioned in an interview that the UK's Competition and Markets Authority doesn't have anything to block Microsoft's acquisition of popular video game developer studio Activision.

Microsoft is also pulling all the stops to acquire Activision, with the company making deals left and right to assure regulators its acquisition won't harm but benefit competitors.

CMA's Lack Of Argument Against Microsoft's Acquisition

Pachter stated in an interview with IGN's Destin Legarie that the CMA has nothing to stand on to reject Microsoft's acquisition deal with Activision due to the fact it remained silent on similar acquisitions in the past.

The analyst mentioned that the CMA didn't block Amazon's acquisition of MGM movies, nor did it speak up against Disney's acquisition of 20th Century Fox in 2019 despite being perfectly capable of doing so.

For those unaware, Amazon bought MGM for $8.5 billion to draw more consumers to its streaming services by adding MGM's content to it, per CNBC. On the other hand, Disney bought 20th Century Fox in 2019 to bring Fox's movies and TV shows to its streaming services, per Polygon and the BBC.

Pachter also stated that Amazon's acquisition of MGM is analogous to Microsoft's acquisition of Activision, with the latter being about three or four percent of the movie market. Meanwhile, Fox makes up 20% of its respective market - a giant acquisition by Disney, but the CMA said nothing about it when the deal was made public.

Both acquisitions were detrimental to Netflix's growth, which had been on the decline since 2022 and had been hosting many movies and TV shows from Fox and MGM, such as "Alien" and "James Bond." However, unlike Sony, Netflix did not contest these acquisitions.

As such, it is illogical and/or unreasonable of the CMA to object to Microsoft's acquisition of Activision just because Sony "whined" about it when it said nothing against MGM and Fox's acquisition.

"No, Sorry so no, I honestly think [Microsoft is] going to win in court," Pachter said.

Though the CMA doesn't work like a court, it is still a regulatory agency - an independent department under the UK government. Despite that error, Pachter's argument still holds water, per Gameranx.

Microsoft's Efforts To Win Over Regulators

To be fair to Microsoft, it is doing all it can to convince regulators that its acquisition of Activision will benefit the video game industry, the gaming community, and its competitors. You may remember that it previously met with the CMA to discuss the regulator's provisional findings and assess the feasibility of the remedies they have in mind to benefit competition and have Microsoft go through with its acquisition of Activision.

The company also made deals with Nintendo and NVIDIA to bring Activision and Call of Duty games to their respective platforms should the deal push through.

Last but not least, Microsoft, along with a delegation of 18 senior executives from various tech giants, went to the European Commission to convince the antitrust watchdog of the benefits of the company acquiring Activision.

Microsoft has yet to reveal the results from these meetings.