This week, Microsoft took a heavy blow in its attempted acquisition of Activision Blizzard, as the UK’s Competition and Markets Authority (CMA) decided to block the transaction on the grounds that the merger could pose a risk to competitiveness in the industry. of cloud games.
Although Microsoft and Activision say they will appeal the decision, a renowned video game industry analyst says that one of the possible solutions for the Redmond giant to get approval is the total removal of Activision Blizzard games from the catalog of services such as Game Pass.
Michael Pachter, from Wedbush Securities, spoke about the decision of the CMA regarding the merger of Microsoft with Activision Blizzard, and revealed that Microsoft can win the appeal or even announce new concessions to get approval to buy the owner of Candy Crush.
While successfully appealing the CMA’s decision is a difficult task for a number of reasons, we believe that the CMA is on the wrong side of the law with this decision, and we believe that your concerns can be addressed.
Ultimately, the CMA’s decision is related to the belief that Microsoft will have pricing power due to its dominance in the cloud gaming market. We believe that the CMA’s belief is correct, and Microsoft failed to resolve this issue prior to the CMA’s decision.
Pachter says the most plausible solution is for Microsoft to make specific concessions for the UK market to win approval.
However, we strongly believe that Microsoft is willing to make concessions to keep the price at $15 per month plus inflation, and we believe the CMA will change its position if Microsoft presents this offer.
The analyst reveals that Microsoft could be forced to leave Activision Blizzard King games out of Game Pass in the UK or create a Game Pass UK, monitored by the CMA and managed separately from other regions.
We believe this will be enough for the CMA to declare the merger acceptable, on the condition that Activision’s games are not available on Game Pass.
It is worth remembering that Microsoft is also going through a merger analysis process by the FTC in the United States, which means that one more country can still be against the deal.
For now, we can only wait for the outcome of the lawsuits to find out how Microsoft will handle this situation.
Do you think Microsoft will get full approval?
