Publisher set to appeal biggest setback to date
The UK Competition and Markets Authority (CMA) has officially voted not to approve Microsoft’s proposed acquisition of publisher Activision Blizzard, placing a major blockade on Microsoft’s path to completing the $68.7 billion purchase, which was first announced in January 2022.
“The CMA has prevented Microsoft’s proposed purchase of Activision over concerns the deal would alter the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for UK gamers over the years to come,” reads the CMA’s official statement. “Microsoft has a strong position in cloud gaming services and the evidence available to the CMA showed that Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own cloud gaming service.”
“The deal would reinforce Microsoft’s advantage in the market by giving it control over important gaming content such as Call of Duty, Overwatch, and World of Warcraft.”
The CMA statement notes that while Microsoft has presented a proposal to address these and other concerns, the CMA evaluation found a “number of significant shortcomings” in the response, noting a lack of coverage for potential platforms such as cloud gaming, or PC operating software outside of Windows. The CMA suggests the merger could “standardise the terms and conditions on which games are available, as opposed to them being determined by the dynamism and creativity of competition in the market.”
Microsoft will exercise its right to appeal the CMA’s decision.
“We have already signed contracts to make Activision Blizzard’s popular games available on 150m more devices, and we remain committed to reinforcing these agreements through regulatory remedies,” said Microsoft president Brad Smith. “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.”
“The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom.”
“We remain fully committed to this acquisition and will appeal.”
While the Microsoft/Activision purchase has already been approved by many territories, including Brazil, Saudi Arabia, South Africa, and Japan, Microsoft is yet to find favor of the UK, Europe, and its home territory of North America. In fact, in regards to the latter, the Federal Trade Commission (FTC) has already filed suit in order to stop the acquisition, in a case scheduled to go to court this August.
Should Microsoft lose its legal battle with the FTC, then it will, again, have the right to appeal. And with that mammoth confrontation already on the horizon, today’s CMA vote adds extra weight to what is already an extraordinarily heavy load that Microsoft must bear in order to complete its proposed purchase.
Microsoft / Activision deal prevented to protect innovation and choice in cloud gaming [Gov.UK]
