Competition regulation

UK Competition watchdog blocks Microsoft’s purchase of Activision Blizzard

The UK’s competition watchdog, the Competition and Markets Authority (CMA) has blocked Microsoft’s $68.7 bn acquisition of Activision Blizzard, citing concerns about the impact on the nascent field of cloud gaming.

According to CMA, the acquisition would have given Microsoft undue power to shape the cloud gaming industry. Microsoft holds an estimated 60-70% share of global cloud gaming services. Additionally, Microsoft has significant strengths in cloud gaming, owning the leading PC operating system (Windows), Xbox, and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming). With this deal, it would acquire important gaming content such as Call of Duty, Overwatch, and World of Warcraft, thus further solidifying its position in the market.

The Guardian reported that the decision is unusual as vertical mergers (between companies that are at different stages in the production process) are generally considered safer than horizontal ones (companies that sell similar products merge, as in this case).

For Microsoft to be able to finalise the acquisition of Activision Blizzard, regulatory bodies in the UK, the US, and the EU needed to give their approval. Currently, US and EU regulators have not yet decided whether or not they will approve the agreement. Meanwhile, both Microsoft and Activision intend to appeal the CMA’s decision. Activision Blizzard and Microsoft have further warned that the decision will discourage technology innovation and investment in the UK.

Australian Competition and Consumer Commission releases new report about competition and consumer laws for digital platforms

On 11 November 2022, the Australian Competition and Consumer Commission (ACCC) published the fifth report of its Digital Platform Services Inquiry.

Regarding consumer issues, the report recommends the submission of digital platforms to mandatory dispute resolution processes and more substantial requirements to fight against scams, harmful apps, and fake reviews, among others. There is also a recommendation for new laws that would require digital platforms to, among other issues, provide processes for reporting scams, harmful apps, and fake reviews, publish review verification processes, and ensure that consumers and small businesses can access appropriate dispute resolution.

The report also proposes mandatory codes of conduct for some digital platforms and services to address competition issues. Besides the consumer and competition recommendations, the report further highlights the ACCC’s support for prohibiting economy-wide unfair trading practices.