After months of deliberation, Microsoft’s attempted $68.7 billion buyout of Activision Blizzard, one of the biggest deals in entertainment history, has been blocked by UK regulators.
According to a report from Eurogamer, the UK’s Competition and Markets Authority has moved to block Microsoft’s purchase of Activision Blizzard King citing concerns that it could “damage competition in the Cloud Gaming market, leading to less innovation and choice for UK gamers.” This isn’t the rationale Microsoft may have expected, given that the CMA’s previously stated concerns were centred on the idea that gaining control of the mega-popular Call of Duty franchise could grant Microsoft an unfairly advantageous position in the gaming market.
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
The CMA’s decision concludes a months-long investigation set in motion by UK regulators to determine whether Microsoft’s acquisition would hand the third-largest gaming company in the world an eye-watering industry monopoly. As recently as this morning Australian time, the Financial Times reported that Microsoft had been confident that the CMA would see things its way and allow the deal to proceed.
In response to the CMA’s decision, Microsoft president Brad Smith says the company remains “fully committed to this acquisition and will appeal.” Smith went on to say he felt that the UK regulator’s decision “rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom.”
“We have already signed contracts to make Activision Blizzard’s popular games available on 150 million more devices, and we remain committed to reinforcing these agreements through regulatory remedies,” said Smith. “We’re especially disappointed that after lengthy deliberations, this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works.”
A statement from Activision Blizzard CEO Bobby Kotick followed shortly thereafter:
Statement from Activision Blizzard CEO Bobby Kotick on UK’s decision to block the Microsoft deal: pic.twitter.com/O9Kw0sLYmP
— CharlieIntel (@charlieINTEL) April 26, 2023
As well as Activision Blizzard CCO Lulu Cheng Meservey:
The CMA’s report today is a major setback for the UK’s ambitions to be a tech hub, and we will work with Microsoft to reverse it on appeal.
This report is also a disservice to UK citizens, who face increasingly dire economic prospects, and we will need to reassess our growth…
— Lulu Cheng Meservey (@lulumeservey) April 26, 2023
Following confirmation that Microsoft intended to appeal the decision, games industry analyst Piers Harding-Rolls noted on Twitter that the chances of the deal closing in 2023 are now very slim. Indeed, if Microsoft can get the block overturned, the issue lands back on the CMA’s proverbial desk. “The Competition Appeal Tribunal site says straightforward cases are aimed to be dealt with within 9 months – if MS wins it gets returned to the CMA.”
All of this, and Microsoft still has the FTC to get through.
More as it develops.
Updated 26/4/23 at 10:29 pm: Added more information around the appeals process.
Leave a Reply