Microsoft previously attempted to buy a mystery mobile game publisher, according to documents published this week by the UK’s competition watchdog.
On Wednesday, the Competition and Markets Authority (CMA) said it was blocking Microsoft’s proposed acquisition of Activision Blizzard due to concerns about the deal’s impact on the future of the cloud gaming market.
While the merger has often been framed as Microsoft seeking to purchase Call of Duty, Xbox boss Phil Spencer has consistently claimed that the $69 billion deal is primarily driven by the company’s mobile gaming ambitions.
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Microsoft has said the merger would improve its ability to create a “new Xbox mobile platform” and a “next generation game store” to compete with Google Play and the App Store.
After months of investigation, on Wednesday the CMA published its final, 418-page report on the deal, which revealed that Microsoft previously attempted to buy a different mobile game publisher.
“We note Microsoft’s submission that Activision has significant strength in mobile gaming, and consider that the presence of Activision’s games on any mobile gaming store would enhance its competitiveness,” it wrote.
“However, we also consider that this could be achieved by less anti-competitive means than the Merger, and Microsoft could acquire ‘attractive content and experience with player engagement and acquisition’ by buying a different mobile games publisher. This appears to have been Microsoft’s strategy – it attempted to buy [redacted] in [redacted], and said [redacted].”
The CMA continued: “We also consider that to launch a competitive mobile platform, Microsoft would need a significant quantity and variety of games.
“This would be likely to involve making agreements with third party publishers in a similar way as it does currently with console and PC games; Microsoft has not provided evidence that its entry attempt would be sufficient relying on Activision’s games alone. For this reason, we disagree with Activision’s contention that a competing mobile games store could only be achieved if the content was from a single organisation.”
Last November, Microsoft’s head of gaming told The Verge’s Decoder podcast that Xbox would struggle to continue as a global business if the company remained “irrelevant” in mobile.
“In terms of the Activision opportunity, and I keep saying this over and over, and it is true, it definitely starts with a view that people want to play games on every device that they have, and in a funny way, the smallest screen that we play on is actually the biggest screen when you think about the installed base in phone,” Spencer said.
“That’s just a place where if we don’t gain relevancy as a gaming brand—we’re not alone in seeing this—over time, the business will become kind of untenable, for any of us. If we’re not able to find customers on phones, on any screen that someone wants to play on, you really are going to get segmented to a niche part of gaming that running a global business will become very challenging.”
Spencer added: “As a percent of the overall gaming business, the console business is shrinking, because the overall business is growing and console stays relatively flat as a business, same thing with PC.”
On Wednesday, Activision Blizzard posted a strong set of quarterly financial results, with net income up 87% year-over-year.
It said the results were driven by growth across all three of its segments (Activision, Blizzard and King), and highlighted the performance of its mobile game business.
“We continued to deliver strong results for our intellectual properties on the strategically-important mobile platform, with mobile net bookings growing double-digits year-over-year, driven by Candy Crush, Call of Duty Mobile and last year’s launch of Diablo Immortal.”
