One of the largest acquisitions in the tech sector will take place when Microsoft buys Activision Blizzard for a staggering $68.7 billion, as disclosed in January 2022. However, Microsoft need regulatory permissions for the transaction to go through. The UK has now blocked the transaction, dealing a blow to the Satya Nadella-led organization. The Competition and Markets Authority (CMA) of the United Kingdom warned that “the merger could make Microsoft even stronger in cloud gaming, stifling competition in this growing market.”
Microsoft Remains Undeterred And Will Appeal
The corporation will appeal the ruling, according to Microsoft President Brad Smith, and the company is still committed to the acquisition.”The MA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom,” Smith said in a statement.
The CMA claimed that Microsoft already holds a dominating position in the cloud gaming market and that if the acquisition goes through, “Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own cloud gaming service.” According to Smith’s announcement, contracts have already been inked by Microsoft to make Activision Blizzard’s popular games available on 150 million additional devices. Smith stated, “We are still committed to enforcing these agreements through regulatory remedies.
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What Is CMA’s Concern?
The CMA is worried that the agreement will strengthen Microsoft’s competitive advantage by giving it ownership over crucial gaming franchises like 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,” the regulatory body stated in a press release.
Here we have a tweet related to this topic:
We’ve prevented @Microsoft from purchasing @Activision over concerns the deal would damage competition in the #CloudGaming market, leading to less innovation and choice for UK #gamers. ☁️https://t.co/SdXt1rYAkZ pic.twitter.com/prWcDI7Evt
— Competition & Markets Authority (@CMAgovUK) April 26, 2023
According to Martin Coleman, chair of the independent panel of experts conducting this investigation, “Microsoft engaged constructively with us to try to address these issues and we are grateful for that, but their proposals were not effective to remedy our concerns and would have replaced competition with ineffective regulation in a new and dynamic market.”
Smith continued by saying that the regulator’s perception of the market was wrong. We are particularly disturbed that, despite thorough thought, this choice “appears to reflect a flawed understanding of this market and the actual operation of the relevant cloud technology.”
