One of the top competition regulators from the UK has blocked Microsoft’s imminent acquisition of Activision Blizzard.
After this recent announcement, Microsoft has already announced that they will be appealing this decision. The UK Competition and Markets Authority’s main reasoning is that they would have an anti-competitive monopoly on cloud gaming. They estimate that cloud gaming is still developing as an industry, and this purchase could stifle development. Microsoft would be willing to offer any games created by Activision Blizzard on their cloud platform, Xbox Game Pass, blocking access to the games on other platforms.
“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. Given the remedy applies only to a defined set of Activision games, which can be streamed only in a defined set of cloud gaming services, provided they are purchased in a defined set of online stores, there are significant risks of disagreement and conflict between Microsoft and cloud gaming service providers, particularly over ten years in a rapidly changing market.” the CMA said on their latest press release.
Brad Smith, Vice President of Microsoft, has already given a retort, stating the following: “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. 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.”
The CEO of Activision, Bobby Kotick also had a few things to say about this decision, after sending an e-mail to employees stating that they would be appealing this decision. Given the number of scandals he has been involved in the past, this is just the cherry on top. “We’re confident in our case because the facts are on our side: this deal is good for competition. At a time when the fields of machine learning and artificial intelligence are thriving, we know the U.K. market would benefit from Microsoft’s bench strength in both domains, as well as our ability to put those technologies to use immediately. By contrast, if the CMA’s decision holds, it would stifle investment, competition, and job creation throughout the UK gaming industry.” said Kotick in his latest press release.
This entire situation has been spiraling out of control for some time now after Microsoft first announced this potential acquisition for $69 billion back in January 2022. Since then plenty of people have argued that this is a scary prospect for the gaming industry. Besides the CMA, Microsoft is still being probed by the EU relating to this merger to assess if it will hurt competition. The U.S. Federal Trade Commission has also sued Microsoft in an effort to block the deal on antitrust grounds. You can read more about this case right here.
