UK regulator the Competition and Markets Authority (CMA) has blocked the Microsoft acquisition of Activision Blizzard. Earlier this week, reports surfaced that the CMA was scheduled to deliver its final ruling on the deal with some suggesting that the deal might be approved. As it turns out, the UK watchdog has now prevented the acquisition from going through, stating that it would lessen competition in cloud gaming and lead to reduced innovation in the gaming industry.
As reported by Video Games Chronicle, the CMA has ruled against allowing Xbox’s nearly $70 billion merger with Activision Blizzard. The CMA has expressed concerns that it 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.”
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Regarding its decision to prevent the acquisition, the CMA wrote:
“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. 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 report continues by mentioning Microsoft’s large foothold in cloud gaming and technology is already concerning but the merger would only give Xbox market control by handing over major franchises like Call of Duty and World of Warcraft:
“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 evidence available to the CMA indicates that, absent the merger, Activision would start providing games via cloud platforms in the foreseeable future.”
However, Microsoft has confirmed that it will appeal the CMA’s decision. Activision Blizzard also released a statement concerning the ruling, stating that it will continue to present its case for the acquisition to go through. Activision Blizzard CEO Bobby Kotick sent an email to the team today which partially reads:
“This merger is a complex process, and I know I’m not the only one frustrated by the hurdles and delays. We’re accustomed to a company culture that moves quickly to accomplish big goals, so it’s tough when we can’t close things out at our usual energetic pace. We’ll keep pressing our case, because we know that this merger will benefit our employees, the broader UK tech workforce, and players around the world.”
Activision said it would work with Microsoft to appeal the UK regulator’s decision while also criticising the CMA by calling it “a disservice to UK citizens.”
The CMA’s verdict stated that the final decision came down to Microsoft’s proposed solution to address the market which “failed to effectively address the concerns in the cloud gaming sector.”
Meanwhile, the European Commission will publish its own verdict on 22 May
Source: Video Games Chronicle
