Activision and Microsoft acquisition deal blocked by UK regulator

Oh my. Over a year on from the announcement of Microsoft’s plans to acquire Activision Blizzard, it’s been confirmed that the UK's Competition and Markets Authority (CMA) has blocked the deal.

As Eurogamer reports, the CMA has been scrutinising the $68.7bn deal for months now, to rule whether or not it would give Microsoft an unfair market advantage if it were to go through. However, despite the regulator’s decision, Microsoft hasn’t given up.

If the acquisition went through, Microsoft would own the Call of Duty IP, which has been making rival company Sony seriously concerned.

Microsoft president Brad Smith said: “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,” he continued. “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.”

According to a press release published by the CMA, the regulators made their decision based on “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”. It noted that Microsoft already accounts for around 60-70% of cloud gaming services across the world, and that evidence suggests that making Activision games exclusive to Microsoft’s cloud gaming service would be “commercially beneficial”.

“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 press release reads. “The evidence available to the CMA indicates that, absent the merger, Activision would start providing games via cloud platforms in the foreseeable future.”

The CMA also claimed that Microsoft’s proposal had several “shortcomings”, including the fact that it didn’t “sufficiently cover different cloud gaming service business models”, nor was it “sufficiently open to providers who might wish to offer versions of games on PC operating systems other than Windows”. Furthermore, the CMA added: “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.”

It remains to be seen if Microsoft’s appeal will be successful.