Microsoft's proposed Activision Blizzard acquisition has been blocked by the UK
"The UK is clearly closed for business"
Microsoft’s proposed acquisition of Activision Blizzard King has hit a large snag on the road. The UK’s Competitions And Markets Authority (CMA) previously released their provisional findings on the $69 billion buyout, laying out concerns over less competition and innovation for UK gamers. Microsoft were allowed to respond to the CMA’s findings, but it seems they weren’t able to quell the regulator’s concerns, as the CMA have now vetoed the merger.
The issue of exclusivity for series like Overwatch, Diablo, and, most of all, Call Of Duty has been at the centre of headlines for months, but the CMA’s final decision is over the acquisition’s possible side effect on the cloud gaming market.
“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,” reads the CMA’s announcement. They also say the deal would lead “to reduced innovation and less choice for UK gamers over the years to come,” and that “Microsoft’s solution failed to effectively address the concerns” in the CMA’s provisional findings.
The CMA estimates that cloud gaming will be worth £11 billion globally and £1 billion in the UK by 2026. Currently, the CMA says that Microsoft accounts for 60-70% of global cloud gaming services, giving them a chunky head start. To the CMA, approving the buyout “would risk undermining the innovation that is crucial to the development of these opportunities.”
Microsoft signed many deals in the lead-up to the CMA’s decision, committing to release games on rival streaming providers and console manufacturers in the future. The CMA found multiple shortcomings in Microsoft's proposal, though, as they say the company wasn’t open to PC operating systems other than Windows. You can read their full list of shortcomings and potential benefits here.
Microsoft president Brad Smith responded to the news by announcing that Microsoft would appeal the 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 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."
Activision Blizzard had a similar response, as a spokesperson told Eurogamer "We will work aggressively with Microsoft to reverse this on appeal,” and that “ the report's conclusions are a disservice to UK citizens, who face increasingly dire economic prospects.” The publisher ended their note with a bite at the government: “Global innovators large and small will take note that - despite all its rhetoric - the UK is clearly closed for business."
The US Federal Trade Commission have already filed suit to block the deal, but as the New York Post reported yesterday that Microsoft is moving to close the deal regardless.
