The UK Competition and Markets Authority has blocked Microsoft’s $68.7 billion attempt to acquire Activision Blizzard, on the grounds that they believe this would have a negative impact on the emerging cloud gaming sector. Microsoft has stated that they will appeal the decision.
The decision might seem surprising, given that the CMA softened their tone over the last couple months. In February they seemed to follow Sony’s train of thought about exclusivity and advantages in console gaming, but an updated opinion emerged in March that basically dismissed Sony’s concerns about COD on Playstation. However, at that time, they still held concerns over cloud gaming, and despite Microsoft’s willingness to sign deals with pretty much any cloud gaming platform they can, it’s this that has tipped the balance.
The regulator states, “The CMA has prevented Microsoft’s proposed purchase of Activision over concerns the deal would alter the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for UK gamers over the years to come.
“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.”
They continue to cite Microsoft’s estimated 60-70% advantage in global cloud gaming and the strength of their global server infrastructure, with their position only being strengthened by being able to make Call of Duty, Overwatch and World of Warcraft cloud gaming exclusives. The CMA expects that Activision would start to license these games to cloud platforms in future anyway.
The ruling won’t bring this arduous and tiresome saga to an end, but does take us to a fresh chapter, as Microsoft will to lodge an appeal.
Microsoft president Brad Smith said in response, “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 United Kingdom.”
Before we even get to that appeal, it’s likely that Microsoft will also see decisions handed down by the US Federal Trade Commission and the EU’s European Commission, who (despite running their own investigations) could seem to be emboldened by the CMA’s stance to follow suit.
Anyway, as for the UK? Death Valley here we come!