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The U.K.’s antitrust regulator, the Competition and Markets Authority, today launched an investigation into Microsoft Corp.’s proposed acquisition of Activision Blizzard Inc. for $68.7 billion.

Activision Blizzard is one of the world’s largest video game companies. It generated revenues of $8.8 billion billion during its 2021 fiscal year. If approved, Microsoft’s acquisition of Activision Blizzard would be one of the largest in the history of the tech industry.

The CMA said today that it will investigate the proposed transaction to determine if it may negatively affect market competition. In particular, officials reportedly plan to explore questions such as whether the deal may lead to higher prices, reduced consumer choice or lower product quality.

Interested third parties, for example competing video game companies, can submit feedback on the matter to the CMA until July 20. The regulator will publish its initial decision about the proposed transaction on September 1. If the CMA identifies potential antitrust issues, it may decide to launch a more detailed probe known as a phase 2 investigation.

Microsoft told CNET that it plans to fully coordinate with the CMA. “We’re committed to answering questions from regulators and ultimately believe a thorough review will help the deal close with broad confidence, and that it will be positive for competition,” Lisa Tanzi, Microsoft’s corporate vice president and general counsel, said in a statement.

When Microsoft first announced plans to acquire Activision Blizzard earlier this year, the company stated that it was expecting to close the transaction in the first half of 2023. “We remain confident the deal will close in fiscal year 2023 as initially anticipated,” Tanzi said today.

The video game market in which Activision Blizzard competes is a major focus for Microsoft. Last year, Microsoft inked a deal to acquire another video game company called ZeniMax Media Inc. for $7.5 billion. The technology giant also sells the popular Xbox series of video game consoles.

The acquisition of Activision Blizzard would further expand Microsoft’s market presence. Microsoft expects that its video game business would become the third-largest in the industry by revenue if the deal completes. Moreover, the company stated that the acquisition is poised to unlock new sales growth opportunities in areas such as the mobile game segment.

The CMA’s newly launched antitrust investigation is not the only regulatory hurdle that Microsoft may face. The proposed acquisition is also being scrutinized by the U.S. Federal Trade Commission. Earlier this year, Reuters reported that the FTC had requested additional data from Microsoft and Activision Blizzard in connection with an antitrust review of the deal.

Policymakers worldwide have increased scrutiny of major tech companies over the past few years. Earlier this week, the European Parliament approved two laws that will create new regulatory requirements for the tech sector. The laws, which are known as the Digital Services Act and the Digital Markets Act, place a particular emphasis on major online platform operators.

Photo: Microsoft

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