UK CMA Blocks Microsoft’s Takeover of Activision Blizzard

Microsoft and Activision Blizzard had proposed a $69 billion acquisition deal that was recently blocked by the UK antitrust regulator, the Competition and Markets Authority (CMA). The CMA expressed concerns that the acquisition would result in a lack of competition in the cloud gaming market. Which could stifle innovation and limit options for UK gamers.

This decision is a significant blow to Microsoft’s ambitions to expand its gaming empire. As it would have given them a dominant position in the cloud gaming market. In this article, we’ll take a closer look at the CMA’s decision, its impact on the UK cloud gaming market. Finally, the reactions from Microsoft and Activision Blizzard.

The CMA’s Decision

The CMA launched an in-depth review of the proposed deal in September 2021. After several months of investigation, the regulator blocked the acquisition. The CMA found that Microsoft’s purchase of Activision Blizzard would give the tech giant a dominant position in the cloud gaming market. Where it already holds a 60%-70% share globally.

The regulator argued that the deal would undermine competition and limit choice for consumers, leading to reduced innovation in the market.

Reactions from Microsoft and Activision Blizzard

Both Microsoft and Activision Blizzard have expressed their disappointment with the CMA’s decision and announced that they plan to appeal. In a statement, Microsoft’s President, Brad Smith, criticized the CMA’s understanding of the market, calling it “flawed.”

He argued that the proposed acquisition would have allowed Microsoft to invest more in cloud gaming and benefit consumers. Activision Blizzard CEO, Bobby Kotick, also expressed his disappointment, saying that the company would work alongside Microsoft to contest the decision.

The CMA’s Concerns

The CMA found that Microsoft’s proposed remedies to its concerns had “significant shortcomings” and would have replaced competition with ineffective regulation in a new and dynamic market. The regulator argued that cloud gaming needs a free, competitive market to drive innovation and choice.

The CMA’s independent panel of experts conducting the investigation argued that Microsoft already enjoys a powerful position. Also it head start over other competitors in cloud gaming, and the acquisition would strengthen that advantage, giving it the ability to undermine new and innovative competitors.

Impact on the UK Cloud Gaming Market

The UK cloud gaming market is expected to be worth up to £1 billion ($1.2 billion) by 2026, around 9% of the global market, according to the CMA. The regulator argued that the deal would have had a significant impact on the market, limiting options for UK consumers and reducing innovation in the sector.

The decision is likely to be a significant blow to Microsoft’s ambitions in the gaming industry and could open the door for other competitors to expand their presence in the UK market.

Conclusion

The CMA’s decision to block Microsoft’s proposed acquisition of Activision Blizzard is a significant setback for the tech giant’s ambitions in the gaming industry. The regulator’s concerns about the lack of competition and reduced innovation in the cloud gaming market played a crucial role in the decision.

Microsoft and Activision Blizzard have announced their plans to appeal the decision, but it remains to be seen whether the appeal will be successful. The decision could open the door for other competitors to gain a foothold in the UK cloud gaming market. Also it could have significant implications for the future of the industry.