The UK’s Competition and Markets Authority has blocked Microsoft’s acquisition of Activision Blizzard, claiming it could lead to “less innovation and choice” for gamers.
Following a lengthy review, the UK’s Competition and Markets Authority has formally prevented Microsoft from acquiring Activision Blizzard – a proposed deal worth north of $68 billion.
In a report published on the British government’s website, the CMA cites cloud gaming as the main area of concern, with the regulator arguing that the purchase of Activision Blizzard would lead to “reduced innovation and less choice for UK gamers over years to come.”
“Microsoft already enjoys a powerful position and head start over other competitors in cloud gaming and this deal would strengthen that advantage giving it the ability to undermine new and innovative competitors,” Martin Coleman, chair of the investigation’s panel of experts, said as part of the report. “Cloud gaming needs a free, competitive market to drive innovation and choice. That is best achieved by allowing the current competitive dynamics in cloud gaming to continue to do their job.”
Microsoft first announced its plans to buy Activision Blizzard in January 2022, and the deal gradually won approval in such countries as Brazil and Saudi Arabia. In the US, the Federal Trade Commission was less enamoured, and filed a lawsuit in an attempt to block the deal. Watchdogs in the EU haven’t yet made a decision, but the CMA’s ruling was widely seen as one of the most decisive of the bunch. Microsoft had already made certain concessions to help assuage the CMA’s concerns – including a 10-year licencing deal with Sony to keep Call of Duty on PlayStation consoles – and it was generally thought that the UK regulator would relax and approve the deal.
Instead, the CMA’s ruling to block the acquisition puts Microsoft’s plans in jeopardy. Microsoft has said it will appeal the decision, with company president Brad Smith stating – per VGC: “We remain fully committed to this acquisition and will appeal. The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom. We have already signed contracts to make Activision Blizzard’s popular games available on 150 million more devices, and we remain committed to reinforcing these agreements through regulatory remedies. We’re especially disappointed that after lengthy deliberations, this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works.”
Reports suggested that Microsoft planned to close its acquisition quickly once it had approval from the CMA. “They are going to cram this down the FTC’s throats,” was how one source put it to the New York Post.
Instead, the situation could drag on for many more months – and may yet fall apart altogether.
More news on this as we get it.
