The UK CMA has blocked Microsoft’s Activision-Blizzard deal

The U.K. Competition and Markets Authority blocked the Microsoft-Activision deal, citing concerns over negative effects the deal might have in the nascent cloud gaming sector. Other concerns the CMA previously outlined, including giving Microsoft too much influence in the console and mobile games spaces, did not factor into the decision.

“The UK cloud gaming market is growing fast,” the CMA said in its statement. “Monthly active users in the UK more than tripled from the start of 2021 to the end of 2022. It is forecast to be worth up to £11 billion globally and £1 billion in the UK by 2026. By way of comparison, sales of recorded music in the UK in 2021 amounted to £1.1billion.”

For reference, consumer spend on video games during 2022 in the United States alone totaled $56.6 billion, substantially more than the forecast global value of cloud gaming.

“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 CMA said that evidence suggested Activision would provide its games, including Overwatch and World of Warcraft, via other cloud platforms in the future, though it didn’t name platforms or share what that evidence was.

Microsoft set out to appease regulators with a stream of 10-year deals, promising Call of Duty on Nintendo Switch and Xbox Game Pass and cloud platforms, including Nvidia’s GeForce Now. However, the CMA said these proposed remedies left other important issues unaddressed, such as barring publishers from offering games on non-Windows platforms and standardizing how cloud games were made available – namely, through Microsoft-owned services.

Microsoft and Activision promised to fight the decision and push for a repeal, stating the CMA’s decision will undermine innovation and harm the U.K.’s future as a place of business.

Meanwhile, the European Union has yet to issue its ruling, and the U.S. Federal Trade Commission’s lawsuit to block the deal remains ongoing.

Written by Josh Broadwell on behalf of GLHF