UK vetoes Microsoft’s $69B Activision acquisition
The proposed acquisition of Activision Blizzard by Microsoft Corporation for $69 billion has encountered a major setback, as Britain's antitrust watchdog has rejected the deal citing potential negative impacts on competition within the cloud gaming market. This veto marks a significant blow to the gaming industry's largest-ever acquisition. The Competition and Markets Authority (CMA) has expressed concerns that the deal could restrict competition in the rapidly expanding cloud gaming sector, which has become a key battleground for the world's biggest technology companies.
In a statement released on Wednesday, the Competition and Markets Authority (CMA) declared that it could not address its concerns regarding the Microsoft-Activision Blizzard deal through remedies such as selling the popular game Call of Duty or behavioral remedies that involve allowing competitors to offer the game on their platforms.
Microsoft had been facing increasing pressure as it sought to persuade regulatory bodies in both Europe and the US to approve the acquisition, which is one of the 30 largest deals in history. The CMA's decision is particularly significant as it has been made before similar rulings from the European Union and the US Federal Trade Commission, which is currently awaiting a hearing in the summer after formally challenging the proposed transaction.
“Microsoft already enjoys a powerful position and head start over other competitors in cloud gaming and this deal would strengthen that advantage giving it the ability to undermine new and innovative competitors,” stated Martin Coleman, the panel's chair.
The CMA's decision was based on the view that the merger could lead to an increase in prices, a reduction in choices, and less innovation for gamers in the UK. However, following a careful review of new evidence, the CMA recently revised its original focus on consoles to concentrate solely on cloud gaming.
“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 UK,” stated Brad Smith, vice chair and president of Microsoft.
The CMA's investigation revealed that the acquisition would enable Microsoft to consolidate its dominant position in the market by obtaining control of some of the most popular and lucrative games in the industry, including Call of Duty, Overwatch, and World of Warcraft. The watchdog further determined that, without the merger, Activision would have been in a position to offer its games on cloud platforms in the future.
“The CMA’s report contradicts the ambitions of the UK to become an attractive country to build technology businesses. We will work aggressively with Microsoft to reverse this on appeal,” an Activision spokesperson said.
What happened before?
The proposed acquisition of Activision Blizzard by Microsoft Corporation has been facing several hurdles recently, with the UK's Competition and Market Authority vetoing the deal due to concerns about competition in cloud gaming.
Additionally, Sony and authorities fear that if the acquisition goes through, Microsoft may withhold Call of Duty from PlayStation, forcing game enthusiasts to turn their attention to Xbox. The lawsuit filed by the Department of Justice against Activision Blizzard regarding salary limits in esports leagues has also complicated matters. These obstacles have made the future of the acquisition uncertain, leaving the gaming industry waiting to see what happens next.