Tag: mergers

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Rival bids for Warner Bros. face competition scrutiny: a Postscript

A previous post detailed how Netflix and Paramount Skydance were competing to acquire part or all of Warner Bros. Discovery (WBD). In December 2025, Netflix announced that it had agreed a deal to buy WBD’s studio and streaming service business. However, Paramount has still pursued a hostile takeover of WBD.

In mid-February 2026, it emerged that WBD had reopened talks with Paramount. Paramount was given a week to make its final offer. Then, under the agreed deal, Netflix would have the right to adjust its bid. Things have developed quickly since then.

Paramount raised its offer price by $1 per share making the deal worth a total of $111bn. WBD stated that this was superior to Netflix’s offer and Netflix declined to increase its bid. Netflix executives stated that:

This transaction was always a ‘nice to have’ at the right price, not a ‘must have’ at any price.1

Paramount will also pay Netflix the $2.8bn fee WBD owes Netflix for terminating the deal.

Whilst it appears Paramount has won the race to acquire WBD, the deal still needs regulatory clearance from competition authorities in the USA and Europe. Paramount CEO, David Ellison, stated that the proposal offered WBD shareholders ‘superior value, certainty and speed to closing.’2

Should the deal go through, the merged company would be in a powerful position as one of the few remaining Hollywood film and television studios.

References

  1. Paramount set for $111bn Warner Bros takeover after Netflix drops bid

    2. BBC News, Danielle Kaye and Nardine Saad (26/2/26)

  2. Ibid

Articles

Questions

  1. What are the similarities and differences between Netflix’ and YouTube’s business models? How close substitutes do you think they are?
  2. Do you think cinemas are a closer or more distant substitute to Netflix than YouTube?
  3. Which of the possible deals, do you think, raised the most competition concerns? What might be a possible remedy that could alleviate these concerns?
  4. Was WBD’s decision to accept the Paramount takeover purely determined by the size of Paramount’s bid?
  5. What is the significance of legacy assets to the acquisition of WBD?
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Rival bids for Warner Bros. face competition scrutiny

The television streaming market is currently attracting considerable attention from policy makers. This follows Warner Bros. accepting Netflix’s offer to buy part of the company for $72bn. To understand how this deal came about and why there is policy concern, we need to go back a few years.

The media and entertainment conglomerate Warner Bros. Discovery (WBD) was created in 2022 when AT&T sold Warner Bros to Discovery.1 However, in June 2025 the company announced that it would split the business into two parts. One would be (a) the studio for TV and movie production, where for example the Harry Potter franchises were made, and (b) the TV streaming business, home to for example the hit TV series Succession. The other, the more traditional and declining TV networks, including channels such as CNN, Discovery and TNT Sports, would form a new company called Discovery Global. David Zaslav, WBD President and Chief Executive stated that:

We are empowering these iconic brands with the sharper focus and strategic flexibility they need to compete most effectively in today’s evolving media landscape.2

Shortly afterwards, rival media and entertainment conglomerate, Paramount Skydance, made a series of bids to purchase the entire WBD business. But these were rejected by the WBD board. Despite this, in October 2025 WBD made public that it was open to a sale and had received unsolicited interest from several companies. It was believed that this included offers from Comcast and Netflix.

Recent developments

In December 2025, Netflix announced that it had agreed a deal with WBD to buy its studio and streaming service business, including its back catalogue of shows. The deal is planned to be put to WBD shareholders in the next few months.3 Netflix has over 300m subscribers across the globe and streams popular shows, such as Stranger Things and Squid Games.

Despite this accepted offer, Paramount has subsequently pursued a hostile takeover of WBD by going straight to its shareholders. In addition, Paramount launched a lawsuit to get further information on how Netflix was chosen as the buyer and to provide WBD shareholders with information on the value of the TV network business that WBD was selling. This, however, was quickly thrown out of the courts.

Over time, Netflix and Paramount have tinkered with their bids to make them more attractive to WBD. Whilst Paramount’s bid was all cash, originally Netflix was offering a mixture of cash and shares. However, in January, it switched this to an all-cash offer. In February, Paramount made clear that if WBD instead accepted its offer, it would pay the $2.8bn termination fee that would be owed to Netflix.4 Furthermore, from early 2027 Paramount would pay WBD shareholders payments of $650m per quarter, known as ticking fees, if combining WBD and Paramount faced regulatory delay.

In mid-February 2026, it emerged that, following a waiver from Netflix, WBD had reopened talks with Paramount. Paramount was given a week to make its offer. Then, under the agreed deal, Netflix would have the right to adjust its bid. This is an attempt by WBD to end the hostile bidding war Paramount is pursuing and to provide clarity for its shareholders. WBD has reiterated that it will:

continue to recommend and remain fully committed to our transaction with Netflix. [However], we welcome the opportunity to engage with you and expeditiously determine whether Paramount Skydance can deliver an actionable, binding proposal that provides superior value.5

The insertion of the ticking fees by Paramount is in response to the substantial attention competition authorities across the globe are paying to the acquisition of WBD. The deal is being investigated by the US Department of Justice and, in early February, Netflix was questioned by the US Senate Antitrust Sub-committee. During this hearing, one of the Senators expressed his anger with the country’s competition laws and raised concerns that the deal would result in Netflix getting:

more power over consumers and leaving fewer alternatives and streaming platforms.6

While Paramount did not attend this hearing, it is believed that it has raised concerns about the Netflix-WBD deal to regulators. Netflix co-CEO, Ted Sarandos, has also met with Donald Trump to discuss the deal. However, Trump subsequently stated that the deal ‘could be a problem’.7

The EU and UK markets

Furthermore, whilst all the companies involved are American, both the mergers with Netflix and Paramount are being investigated by the European Commission as markets in Europe would be affected.

In the UK, a group of politicians and former policymakers, have written to the Competition and Markets Authority urging it to conduct a full investigation of the Netflix-WBD merger. The letter argues that the merger could have:

damaging consequences for consumers, the UK’s world-leading creative industries and the UK cinema industry.

and that:

At a time when the British consumer can ill-afford more price increases, Netflix would possess an unprecedented ability to raise prices to access television and films.8

The letter comes at a time when pressure is being placed on the CMA to adopt a generally more business-friendly approach.

The impact of the merger on the UK market is particularly complicated since Warner Bros.’ streaming service, HBO Max, is only due to launch in the UK in March 2026. This is still the plan, with WBD’s head of global streaming, Jean-Briac Perette acknowledging that:

We are likely the last scaled global streamer to come to market. We’ve tried to learn from the rest. We’re a complementary and distinct service to the more volume-driven or basic cable-like streamers in the market. More is not better. Better is better.9

An alternative route to regulatory approval

An easier route to regulatory approval may well be instrumental in allowing Netflix or Paramount to win the battle for WBD. Netflix stresses that the deal will create economic growth and jobs. Netflix’s Sarandos highlighted that:

This is not a typical media merger where you end up with what’s called the Noah’s Ark problem — two of everything. We are buying a company that has assets that we do not, and we will keep investing in those.10

The problem of economic power

In contrast, critics argue that either of the deals would create a new company with too much power. However, given the nature of the firms involved, the competition issues will be fundamentally different between the two deals.

The Paramount deal would primarily reduce the number of studios in the market. This could provide the new merged studio with more bargaining power over distributors, advertisers and creators. Ultimately, this could negatively impact on the final product that consumers watch in the cinema and on television.

The Netflix deal on the other hand would impact directly on the streaming market. In the USA, 80% of consumers have both Netflix and HBO Max.11 After the merger, consumers would have less choice of competing services and Netflix-HBO Max combined may well have an incentive to raise its subscription prices.

In the UK, there are currently three leading streaming services: Netflix, Amazon Prime and Disney+, each with around 23% of the market.12 The merger with WBD could allow Netflix to become the clear market leader.

Concerns about YouTube

When examining streaming markets in all countries, an important factor will be whether to include YouTube in the market. Netflix certainly argues that it is a key competitor, at the hearing Sarandos stated that:

we are competing for the same content, we are competing for the same viewers, we are competing often for the same ad dollars. YouTube is not just cat videos anymore. YouTube is TV.13

If YouTube is included, in the USA it would be the market leader with 13%, ahead of Netflix on 9%. However, the competition authorities may conclude that YouTube’s product and business model is sufficiently different and so not include it in the streaming market.14

The issue of cinemas

A second concern in the Netflix deal will be the Warner Bros.’ studio content that Netflix would own. The merged business may have an incentive to discontinue, raise the price or reduce the quality of the studio output that it supplies to cinemas. Thus, the competition authorities’ investigations will also pay close attention to the impact on the cinema market.

In line with these arguments, the Hollywood screenwriters’ union, the Writers Guild of America, has indicated that the Netflix-WMD deal should be stopped and filmmakers are clearly concerned about Netflix prioritising streaming.15
 
 
The competition authorities may well consider imposing remedies before they are willing to allow either deal to go ahead. With this in mind, it is interesting that Netflix has already made clear that it will continue the 45-day exclusive window that Warner Bros. provides cinemas to show its films.

It will be fascinating to see how the competing bids play out and how the competition regulators view them.

*   *   *

This post has been updated in a Postscript, following a further bid from Paramount that was not matched by Netflix.

References

  1. AT&T agrees deal to combine WarnerMedia with Discovery

    2. The Guardian, Mark Sweney (16/5/21)

  2. HBO and CNN owner to split streaming and cable businesses

    3. BBC News, Adam Hancock (10/6/25)

  3. Netflix’s co-CEO went to an antitrust hearing and a culture war broke out

    4. NBC News, Saba Hamedy (3/2/26)

  4. Warner Bros gives Paramount seven days to make ‘best and final’ offer

    5. The Guardian, Mark Sweney (17/2/26)

  5. ibid.

  6. NBC News, op. cit.

  7. Trump says $72bn Netflix-Warner Bros deal ‘could be a problem’

    8. BBC News, Osmond Chia (8/12/25)

  8. UK politicians call for competition review of Netflix bid for Warner Bros

    9. Financial Times (26/1/26)

  9. Warner streaming boss defends HBO Max UK launch ahead of Netflix takeover

    10. Financial Times (9/2/26)

  10. NBC News, op. cit.

  11. Netflix and Warner Bros struggle to defend merger

    12. BBC News, Danielle Kaye (3/2/26)

  12. Netflix, Disney+, Prime: Streaming platform market share report UK 2025
    InsiderMedia, Jennifer O’Keeffe (2/12/25)

  13. BBC News, Danielle Kaye op. cit.

  14. Paramount sweetens Warner Bros bid with offer to pay Netflix break-up cost, other fees

    15. Reuters, Harshita Mary Varghese and Aditya Soni (11/2/26)

  15. In a takeover of Warner Bros., Netflix makes a play for 21st century Hollywood’s throne

    16. NBC News, Daniel Arkin (5/12/25)

Articles

Questions

  1. What are the similarities and differences between Netflix’ and YouTube’s business models? How close substitutes do you think they are?
  2. Do you think cinemas are a closer or more distant substitute to Netflix than YouTube?
  3. Which deal do you think raises the most competition concerns? What might be a possible remedy that could alleviate these concerns?
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The 4Ps approach to merger policy in the UK

The approach towards mergers remains the most controversial area of competition policy. Some argue that policy makers in both the UK and EU have been too easily persuaded by the arguments put forward by firms and so have allowed too many mergers to proceed. Others claim that the opposite is true and that merger policy has prohibited mergers that should have been allowed to proceed. This, then, has a negative impact on investment, innovation, productivity and growth.

In recent years there has been more specific criticism of merger policy in the UK. The government has indicated that it wants the Competition and Markets Authority (CMA) to be less interventionist and take a more pro-growth approach.

In February 2025, in response to this criticism, the CMA launched its new ‘4 Ps’ approach to merger policy: Pace, Predictability, Proportionality and Process. Various changes to the investigation process have been proposed in the past 12 months using this framework.

Pace. The time taken by the CMA to initially assess a merger before deciding whether a Phase 1 investigation is necessary (i.e. the pre-notification procedure) was reduced from 65 to 40 working days. Also, the target to complete straightforward Phase 1 investigations was reduced from 35 to 25 days.

Predictability. The proposed merger guidelines, published in October 2025, provide more detail on (a) what criteria will be used to measure market shares when applying the ‘share of supply test’ (this is where the combined UK market share of two merging businesses is at least 25%, provided one business has a UK turnover of at least £10 million), and (b) the factors that are likely to lead to the competition authorities concluding that one business has gained ‘material influence over another’. Businesses had complained that there was too much uncertainty about the way the share of supply test and material influence were applied. The CMA is also considering greater alignment with other international regulators over decision making rather than its previous policy of acting independently. All these measures should increase the predictability of the investigation process.

Proportionality. Proportionality refers to the objective of addressing any competition issues in merger cases in a way that places the minimum burden on the businesses involved. To improve proportionality, the CMA has indicated that in future cases it will be more willing to use behavioural remedies – requiring firms to take or desist from certain actions. New draft guidelines identify more situations where the use of behavioural remedies may be appropriate. However, they also show that the CMA still views structural remedies (e.g. preventing the merger or requiring firms to demerge or to sell certain assets) as more effective in many situations. Another important measure to improve proportionality is the introduction of a new ‘wait and see’ approach to global mergers. The CMA will now wait to see if the actions taken by other competition authorities in global cases address any concerns in the UK market before deciding whether to launch a review.

Process. To improve the process, the CMA has announced plans to engage with businesses at a much earlier point in the process. For example, it has pledged to share its provisional thinking in the early stages of an investigation by implementing new ‘teach-in’ sessions and having more regular update meetings. Much earlier meetings that focus on possible remedies will also take place. This may make it possible for the CMA to assess the suitability of more complex remedies during a Phase 1 investigation rather than having to wait for a longer and more costly Phase 2 review. Phase 2 reviews will also no longer be managed by panels of independent experts. This role will now be carried out by the internal CMA board.

Some critics argue that the CMA has not fully considered the potential benefits of mergers in many cases. For example, a merger could (a) have procompetitive effects, known as rivalry enhancing efficiencies (REEs) and/or (b) benefits for consumers outside of the relevant market, known as relevant customer benefits (RCBs). In response to this criticism, the CMA is currently reassessing its approach to including evidence on REEs and RCBs.

The CMA is still currently consulting with interested parties about many of these proposed changes. It will be interesting to see what final decisions are made in the next couple of years.

Articles

CMA documentation

Questions

  1. Of all the mergers considered by the CMA in 2024/25, find out what percentage were formally investigated. How many were blocked from taking place? Do you believe that this indicates that merger policy is too weak or too strong?
  2. What three criteria must be met for a business arrangement to be classed as a ‘relevant merger situation’ by the CMA?
  3. Identify some different methods that one business could use to gain material influence over the way another company operates.
  4. Outline the ‘turnover test’, the ‘share of supply test’ and the ‘hybrid test’.
  5. Discuss the potential advantages of using behavioural remedies as opposed to structural remedies in merger cases. Why has the CMA still preferred the use of structural remedies in most situations?
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The merger of Vodafone and Three: competition implications

In September 2023, UK mobile phone network operators Vodafone and Three (owned by CK Hutchinson) announced their intention to merge. At the time, in terms of total revenue from the supply of mobile phone services to consumers, Vodafone and Three had market shares of 23% and 12%, respectively.

In addition to Vodaphone and Three, there are two other major network operators – the BT Group (BT & EE) and Virgin-media 02, with market shares of around 31% and 23%, respectively, with other operators having a combined market share of 12%. As we shall see below, these other operators use one of the four major networks. Therefore, the merged entity of Vodafone-Three would become the market leader with a share of around 35% and there would only be three major network operators competing in the UK.

Not surprisingly, the UK competition agency, the Competition and Markets Authority (CMA), decided to conduct a detailed investigation into whether the merger would harm competition. However, in early December 2024 the CMA announced its decision to allow the merger to go ahead, subject to several important commitments by the merging parties.

CMA’s phase 1 findings

The CMAs phase 1 investigation raised several concerns with the merger (see fifth CMA link below).

First, it was worried that retail and business customers would have to pay higher prices for mobile services after the merger.

Second, in addition to the four mobile network operators, the UK market is served by a number of mobile ‘virtual’ network operators (MVNOs), for example Sky Mobile and Lyca Mobile. As we saw above, these suppliers account for around 12% of the consumer retail market. The MVNOs do not own their own networks and instead agree wholesale terms with one of the network operators to access their network and supply their own retail mobile services. The CMA was concerned that since the merger would reduce the number of networks competing to host these MVNOs from four to three, it would result in MVNOs paying higher wholesale access prices.

Vodafone and Three did not offer any remedies to the CMA to address these competition concerns. Consequently, the CMA referred the case to phase 2 for a more thorough investigation.

CMA’s phase 2 findings

The CMA’s analysis in phase 2 confirmed its earlier concerns (see linked report below). It was still worried that because the merged entity would become the largest network operator, retail customers would face higher prices or get a poorer service – for example, a reduced data allowance in their contract. In addition, the CMA remained concerned that the MVNOs would be negatively impacted and that this would lessen their ability to offer the best deals to retail customers.

However, during the phase 2 investigation, the merging parties put forward various efficiency justifications for the merger. They argued that the merger would provide them with much needed scale and investment capacity to improve their network and roll-out 5G technology. The CMA recognised these claims but questioned the merging parties’ incentives to go through with the investment once the merger was approved. Furthermore, it was concerned that if they did invest, this would be funded by raising the prices charged to consumers.

As a result, the CMA only agreed to allow the merger once Vodafone and Three accepted remedies that would address these concerns.

The remedies necessary for the merger to proceed

First, the merged entity must cap a range of tariffs and data plans it offers in the retail market for three years.

Second, again for three years, it must commit to maintain the wholesale contract terms it offers to MNVOs.

Finally, over the next eight years, the merged entity must deliver the network upgrade plans that it claimed the merger would allow. The CMA believes that in the long run this network development would significantly boost competition between the three remaining mobile network operators.

The acceptance of remedies of this nature was unusual for the CMA. Typically, like other competition agencies, the CMA has favoured divestment remedies in which the merging parties are required to sell-off some of the assets or capacity acquired. In contrast, the remedies in the Vodafone-Three deal impact on the merging parties’ behaviour.

One clear disadvantage of such remedies is that they require the merged firm’s actions to be monitored, in this case for eight years, to make sure it adheres to the agreed behaviour. One reason why the CMA may have been willing to accept this is that the communications industries regulator, OFCOM, will be able to assist with this monitoring.

It was also surprising that the CMA was willing to allow the number of network operators to decrease to three. Previously, there had been a perception that it was important to maintain four networks. This was certainly the view in 2016 when Three’s attempted merger with O2 was prohibited. This decision was made by the European Commission (EC). However, the CMA raised serious concerns to the EC and when the merging parties offered behavioural remedies argued that these were:

materially deficient as they will not lead to the creation of a fourth Mobile Network Operator (MNO) capable of competing effectively and in the long-term with the remaining three MNOs such that it would stem the loss of competition caused by the merger.

Why has the authorities’ attitude towards the merger changed?

So why has there been a change of stance in this latest attempted merger in the mobile phone sector?

One explanation is that the market has fundamentally changed over time. The margins for network operators have declined, network usage has grown and there has been a lack of investment in expensive 5G technology. This would certainly fit with the CMA’s desire to use the remedies to facilitate network investment.

A second possible explanation is that the CMA has recently faced criticism from UK Prime Minister, Keir Starmer (see third Guardian article below). In a speech at the International Investment Summit in London in October 2024, he said that

We will rip out the bureaucracy that blocks investment and we will make sure that every regulator in this country take growth as seriously as this room does.

In response to this, the CMA has indicated that in 2025 it will review its approach to mergers, ensuring that only truly problematic mergers don’t proceed, and reconsider when behavioural remedies may be appropriate (see final CMA link below).

The CMA’s decision in the Vodafone-Three case certainly demonstrates that it is now willing to accept behavioural remedies when there is a regulator in place to support the subsequent monitoring.

It will be interesting to see how this merger affects competition in the mobile phone market and, more generally, whether the CMA starts to implement behavioural remedies more widely, especially in markets where it would have to do all the subsequent monitoring.

Articles

CMA reports, etc

Questions

  1. Why is it beneficial to have MVNOs in the market for mobile phone services?
  2. Why is it important that MVNOs have a choice of mobile networks to supply their retail mobile services?
  3. How do you think the other mobile network operators will react to the Vodafone-Three merger?
  4. Compare the relative benefits of blocking a merger with requiring merging companies to adopt certain remedies.
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Game over or game on? The Microsoft/Activision merger case concludes

In a recent blog post on this site about the Microsoft/ Activision Blizzard merger, the European Commission had just reached a decision to approve the merger subject to remedies, but the investigations in the USA and UK were still ongoing. Since then, the merger has been approved by competition authorities around the world, including in the USA and UK, and thus the merger has gone through.

However, there were some differences in the way the case unfolded under the regulation of these three competition authorities.

The European Commission’s (EC) decision

The European Commission (EC) was the first to give the merger the green light. The EC’s in-depth investigation revealed concerns about the market for the distribution of games via cloud game streaming services. In particular, the concern was related to the possibility that Microsoft might make Activision’s games exclusive to its own cloud game streaming service (Game Pass Ultimate) and restrict access from competing cloud game streaming providers.

The EC argued that this in turn could strengthen Microsoft’s position in the market for PC operating systems, as Microsoft may have an incentive to limit or reduce the quality of the streaming of Activision’s games on PC’s which do not use the Windows operating system.

Thus, while the merger was approved, this was subject to remedies. These remedies included 10-year licensing commitments from Microsoft, as outlined in the EC’s press release:

These licenses will ensure that gamers that have purchased one or more Activision games on a PC or console store, or that have subscribed to a multi-game subscription service that includes Activision games, have the right to stream those games with any cloud game streaming service of their choice and play them on any device using any operating system.

This type of remedy is called a behavioural remedy and often requires the merging firms to commit to taking particular actions post-merger. Unlike structural remedies (which may for example, require the merging firms to sell off an entire business unit), behavioural remedies often require monitoring and enforcement by competition authorities. The EC argued that the deal, with these behavioural remedies, could strengthen competition in the market for cloud gaming.

The Federal Trade Commission’s (FTC) decision

The FTC, in the USA, had similar concerns to those of the EC related to the cloud gaming market. These were outlined in the FTC’s press release:

[The deal] would enable Microsoft to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription content and cloud-gaming business.

The FTC also argued that when Microsoft had previously acquired gaming content, it had made this content exclusive to Microsoft consoles. This could result in higher prices, and reduced quality, choice and innovation. To this end, the FTC appealed in an attempt to block the deal, but the Court ruled in favour of the deal going ahead.

During this time, Microsoft announced that it had committed to keeping Call of Duty on Sony’s PlayStation after the merger, and this likely contributed towards the court’s decision. Hence, the FTC was unsuccessful in its attempt to halt the merger.

The Competition and Markets Authority’s (CMA) decision

The final hurdle remaining for Microsoft, was the CMA’s approval. As outlined in a previous blog post on this site, the CMA’s phase 2 investigation revealed similar concerns about the supply of cloud gaming services (amongst concerns related to the market for the supply of console gaming services, which were later dispelled), and whilst Microsoft offered some commitments similar to those accepted by the EC, the CMA did not deem these to be sufficient to address its concerns and thus prohibited the merger.

The CMA’s published remedies guidance suggests that the regulator has a preference for structural remedies over behavioural remedies. One of the reasons for this is because of the requirement to monitor and enforce the commitments, and this therefore formed part of the CMA’s reasons for not accepting the remedies. Unsurprisingly, Microsoft appealed this decision to the UK’s Competition Appeals Tribunal (CAT), probably partly driven by the fact that the EC accepted similar remedies to those rejected by the CMA. However, Microsoft and the CMA agreed that if the appeal was paused, Microsoft could propose a new deal.

The new deal: did the CMA make a U-turn?

In August 2023, Microsoft submitted a new restructured deal for the CMA to review. As described by the Chief Executive of the CMA, this deal was “substantially different from what was put on the table previously” and was therefore investigated as a separate merger case under the CMA’s phase 1 processes.

The new deal meant that Microsoft would no longer be purchasing the cloud streaming rights held by Activision. Instead, the cloud streaming rights would be sold to an independent third-party game publisher – Ubisoft. This means that Microsoft will not be in control of the cloud gaming rights for Activision’s gaming content (outside of the EEA), and therefore will not be able to restrict its competitors’ access to Activision’s games, which was one of the main concerns outlined by the CMA based on the initial merger proposal. The new deal also opens up the possibility that Activision’s games will be made available on cloud gaming services that run on a non-Windows operating system.

On 13 October, the CMA approved this deal, subject to the cloud gaming rights being sold to Ubisoft, and some subsequent commitments from Microsoft in relation to its relationship with Ubisoft post-merger, as outlined in the CMA’s final report. However, the Chief Executive of the CMA has emphasised that they are unhappy with the way that Microsoft dealt with negotiating the approval of the merger:

But businesses and their advisors should be in no doubt that the tactics employed by Microsoft are no way to engage with the CMA. Microsoft had the chance to restructure during our initial investigation but instead continued to insist on a package of measures that we told them simply wouldn’t work. Dragging out proceedings in this way only wastes time and money.

What’s next in big tech?

While the merger deal has now gone through, the FTC has recently re-opened its case against Microsoft, which will continue to unfold over the next couple of months until December when the case will appear in Court. This means it is possible that the FTC could attempt to undo the merger, though this would be challenging.

In the tech market more broadly, the CMA has recently launched a market investigation into cloud services. While the focus of this blog post was on cloud gaming, cloud services are now increasingly being used by many businesses. The CMA’s issues statement suggests that a key focus of its investigation will be on the ability for customers to switch between cloud service providers. Microsoft is one of the largest providers of cloud services in the UK, and therefore it is inevitable that it will be under scrutiny. Given all three regulators’ recent efforts to ‘crackdown’ on big tech, this is just one of a series of cases that will be interesting to see unfold.

Articles

Competition authorities documentation

Questions

  1. Discuss the effectiveness of behavioural remedies vs structural remedies for a merger.
  2. Why might the competition authorities have been concerned about the possibility of Microsoft making Activision’s games exclusive to its own cloud game streaming service? Is exclusive dealing always anti-competitive?
  3. Why was the transfer of the cloud game streaming rights to Ubisoft seen as a suitable remedy?