The UK competition authority (CMA) has issued its preliminary conclusion on the merger between Microsoft and Activision Blizzard, considering it as negative for competition in segments such as services, cloud gaming and operating systems.
Although many are suspicious that this is an indication that the transaction will not be approved, Nick McKay and Michael Pachter, analysts at Wedbush Securities, say that this is a sign that the CMA knows that it has no arguments to stop the deal and that in May it will be official.
Since Microsoft initiated the acquisition of Activision Blizzard, the transaction has been divisively received, mainly because of concerns from competing companies like Sony, Google and NVIDIA, who fear the possibility of a monopoly.
Even though many renowned bodies have already approved the merger, the UK CMA, US FTC and the European Union are still reluctant and are investigating the deal deeply to assess the possibility of it harming consumers in the future.
This week, we had a partial opinion on the CMA’s decision on the deal and many were concerned about the reservations pointed out by the agency, but some renowned analysts believe that the partial opinion is a strong indication that the deal will be approved.
The political impact of today’s CMA action is perhaps most important. We interpret today’s document as a sign that the UK knows it has an unconvincing legal argument. For us, the FTC discovered this late last year and rushed to block the deal in hopes of being the first to get concessions from Microsoft.
Wedbush believes that the CMA realized the same and accelerated the objection to get concessions from Micosoft before the FTC and brag about it. The FTC has not yet presented solutions, while the CMA has already presented ways for Microsoft to act and get the business.
For Pachter and McKay, the CMA document only indicates that the purchase of Activision Blizzard is practically approved and in May everything will be official.
In addition, they believe that Microsoft will accept some concessions to finalize the purchase, but it is more than guaranteed.
We still don’t know what concessions Microsoft will have to make to win approval, but will they have to open hand of the Call of Duty franchise?
