Microsoft’s proposal to acquire Activision Blizzard blocked by UK
UK’s Competition and Markets Authority (CMA) has blocked Microsoft’s $69 billion proposal to acquire Call of Duty maker Activision Blizzard over the concerns that the deal could hinder competition in the cloud gaming market.
UK’s watchdog said that Microsoft’s proposed purchase of Activision ‘would alter the future of the fast-growing cloud gaming market’, which in turn would lead to ‘reduced innovation and less choice for UK gamers over the years to come’.
What are CMA’s concerns over the Microsoft – Activision Blizzard deal
CMA says that the cloud gaming market in the UK is growing fast and that the monthly active users in the UK more than tripled from the start of 2021 to the end of 2022. It is estimated to be worth up to £11 billion globally and £1 billion in the UK by 2026. Under the circumstances, the deal could ensure Microsoft makes Activision’s games exclusive to its own cloud gaming platform.
CMA believes that the deal would reinforce Microsoft’s advantage in the market by giving it control over popular such as Call of Duty, Overwatch, and World of Warcraft. “The evidence available to the CMA indicates that, absent the merger, Activision would start providing games via cloud platforms in the foreseeable future,” the watchdog said.
UK’s watchdog also said that allowing Microsoft to go through with the deal would also hamper innovation in the market. “Allowing Microsoft to take such a strong position in the cloud gaming market just as it begins to grow rapidly would risk undermining the innovation that is crucial to the development of these opportunities,” CMA added.
Talking about the potential remedies that Microsoft had suggested to placate CMA’s concerns, the UK’s watchdog said that the suggested remedies ‘do not sufficiently cover different cloud gaming service business models, including multigame subscription services’ and that they do not ‘open to providers who might wish to offer versions of games on PC operating systems other than Windows’.
Furthermore, CMA said that the suggested remedies also undermine healthy competition in the cloud gaming market. “It would 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, as would be expected in the absence of the merger,” the organisation added.
CMA said that by preventing the merger would ‘allow market forces to continue to operate and shape the development of cloud gaming’ without regulatory intervention.
What is Microsoft saying?
Responding to the development, Microsoft has said that it remains committed to the deal and that it will appeal CMA’s decision.
We remain fully committed to our acquisition with @ATVI_AB and will appeal today’s determination by the CMA. Here’s our statement. pic.twitter.com/ylvDP5RUqQ
— Brad Smith (@BradSmi) April 26, 2023
“We remain fully committed to this acquisition and will appeal…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,” Microsoft’s Vice Chair and President, Brad Smith said in a statement.
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