UK Antitrust Regulator Blocked Microsoft's $69 billion Activision Blizzard Acquisition

UK Antitrust Regulator Blocked Microsoft's $69 billion Activision Blizzard Acquisition

Britain’s Competition and Markets Authority (CMA) has blocked Microsoft's $69 billion acquisition of Activision Blizzard, the makers of popular video games like Call of Duty, Candy Crush, Overwatch, and World of Warcraft.

Microsoft's ambitions in the gaming industry have been severely undermined by this decision, and it is the biggest gaming deal ever to be blocked by the CMA in its history.

The regulator expressed its concern that the acquisition could hinder competition in cloud gaming, which is an emerging market predicted to be worth $13.7 billion globally by 2026.

In its ruling, the Competition and Markets Authority said Microsoft could seek to make Activision’s games exclusive to its own platforms and then increase the cost of a Game Pass subscription.

“The cloud allows UK gamers to avoid buying expensive gaming consoles and PCs and gives them much more flexibility and choice as to how they play. 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,” it added.

The CMA also noted that the deals would ‘standardize the terms and conditions on which games are available,’ instead of open competition in the cloud gaming market.

“We concluded that, without the merger, Activision games would become available on cloud gaming services in the UK in the near future,” the Regulator concluded.

Having waived its concerns last month regarding the impact of the deal on the market in which Sony's PlayStation dominates, the CMA has now decided to move forward with its decision, leaving the remaining hurdle of cloud streaming services to overcome.

To overcome this challenge, Microsoft had entered into licensing agreements with the proprietors of streaming platforms such as Valve, Nvidia, and Boosteroid. It had also offered Sony a 10-year Call of Duty license, in line with an agreement to bring the franchise to Nintendo's Swi The deal to combine the businesses was met with growing opposition by antitrust regulators worldwide. In December, the US Federal Trade Commission sued to block the takeover over similar competition concerns. A hearing is scheduled for August. The European Union is also evaluating the transaction.

Regardless, the CMA concluded that Microsoft's commitment to offering access to Activision's Call of Duty franchise to leading cloud gaming platforms would not effectively remedy its concerns.

The regulator was of the view that cloud gaming is growing fast, freeing people from the need to rely on expensive consoles and gaming PCs, and giving them more choice over how and where they play games. Therefore, it is essential to protect competition in this emerging and exciting market, opined the Regulator.