Microsoft's proposed acquisition of gaming giant Activision Blizzard for $69 billion has been blocked by the UK's Competition and Markets Authority (CMA). The CMA has raised concerns about the deal's impact on the fast-growing market for cloud gaming. Microsoft has vowed to appeal the decision, but the move is likely to delay the deal's completion.
What is the Microsoft-Activision deal?
Microsoft announced its intention to acquire Activision Blizzard, the parent company of popular video game franchises such as Call of Duty, World of Warcraft, and Candy Crush, in January 2022. The deal would have given Microsoft a major foothold in the gaming industry and boosted its cloud gaming capabilities.
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Why did the UK regulator block the deal?
The CMA said it was concerned that the acquisition would lead to reduced competition in the market for cloud gaming, where players stream games over the internet rather than download them to a console or PC. The regulator said it had found evidence that the deal would result in higher prices and fewer choices for UK consumers.
In a statement, the CMA's Chief Executive, Andrea Coscelli, said: "The CMA is concerned that the deal would result in Microsoft becoming the largest provider of cloud gaming services in the UK, with the ability and incentive to raise prices and reduce choice for customers."
What happens next?
Microsoft has said it will appeal the CMA's decision, arguing that the regulator has misunderstood the gaming market and the nature of the deal. However, the appeal process could take months, and the deal's completion is likely to be delayed.
In a statement, Microsoft said: "We believe the CMA's decision is fundamentally flawed and inconsistent with the facts and the law. We will be appealing and are confident that we have a strong case."
The CMA's decision comes amid growing scrutiny of big tech companies' acquisition of smaller rivals, particularly in the fast-growing gaming industry. The US Federal Trade Commission is currently investigating similar concerns about the impact of the Microsoft-Activision deal on competition in the US.
The UK's decision to block Microsoft's proposed acquisition of Activision Blizzard is a blow to the tech giant's ambitions in the gaming industry. It also highlights the increasing scrutiny of big tech companies' acquisitions of smaller rivals, particularly in the fast-growing market for cloud gaming. Microsoft has vowed to appeal the decision, but the move is likely to delay the deal's completion. The outcome of the appeal could have wider implications for the gaming industry and for the future of big tech acquisitions.
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