UK regulator blocks Microsoft-Activision deal
Despite recent signs that it was softening its stance on Microsoft’s proposed $68.7 billion acquisition of Activision Blizzard, Britain’s antitrust regulator, the Competition and Markets Authority, has announced that it has decided to formally block the agreement.
The CMA said its decision was motivated by concerns about the deal’s effect on the future of the burgeoning cloud gaming market, where Microsoft is a major player. It feared the deal would lead to “less innovation and less choice for UK gamers in years to come.”
It said a solution proposed by Microsoft had “significant flaws and would require regulatory oversight by CMA.”
“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 government agency said. announced her months findings. long review.
It estimates that Microsoft already accounts for “an estimated 60-70% of global cloud gaming services,” thanks to the benefits of owning Xbox, Windows, and the Azure platform, as well as the Game Pass game subscription service that Xbox Cloud Gaming powers. is bound. The CMA considers cloud gaming to be an important, fast-growing sector of the games market that allows gamers to “buy expensive consoles” and gives them more “flexibility and choice in how they play.”
The CMA considered Microsoft’s proposed “behavioral” solutions, in the form of 10-year deals forcing it to make its games available for other cloud platforms, as insufficient. It said they would need regulatory oversight, didn’t adequately cover different business models such as subscriptions, and risked disagreement between Microsoft and other cloud gaming providers given the amount of change that could happen in the industry over a 10-year period.
Microsoft and Activision Blizzard immediately said they would appeal the CMA’s decision.
In a statement, 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 UK. We have already signed contracts to make Activision Blizzard’s popular games available on an additional 150 million devices, and we remain committed to strengthening these agreements through regulatory action. We are particularly disappointed that, after much deliberation, this decision seems to reflect a lack of understanding of this market and the way the relevant cloud technology works.”
An Activision Blizzard spokesperson gave an even more pithy, almost threatening response. “The CMA’s report contradicts the UK’s ambitions to become an attractive country for setting up technology companies,” the report said. “We will aggressively work with Microsoft to overturn this on appeal. The report’s conclusions are a disservice to British citizens, who face a deteriorating economic outlook. We will reassess our UK growth plans. Global innovators big and small will take note that – for all its rhetoric – the UK is clearly closed for business.”
To develop…