Microsoft’s Acquisition Of Activision Blizzard Is Blocked By UK Competition Watchdog

(CTN News) – It has been announced that Microsoft’s planned acquisition of Activision Blizzard has hit a roadblock as the UK’s antitrust regulator, the Competition and Markets Authority (CMA), has ruled to block the $68.7 billion transaction.

Specifically, the CMA stated that the proposed merger could harm the nascent cloud-gaming market by creating a monopoly player.

The report warns that Microsoft, which already controls Windows and Xbox, as well as the infrastructure supporting them, would have a market share of 60-70%, hence an incentive to withhold Activision Blizzard games from its competitors and significantly weaken competition.

In March 2022, the UK announced that the console gaming market was less of an issue than it had originally thought.

It concluded that while Microsoft could block high-profile Activision Blizzard titles from competing platforms, it did not make much business sense to forfeit all those sales.

In the course of the investigation, the focus was redirected to the cloud gaming market, where there were greater grounds for concern.

According to the report of the CMA, Microsoft’s strengths as a brand and as a provider of infrastructure must be taken into account.

Specifically, if combined with Activision Blizzard’s gaming titles, these could be more readily weaponized in the cloud gaming sphere, even if not against Sony, Nintendo, or other companies engaged in cloud gaming.

The report also noted the possibility of a monopoly provider causing more general ills.

By not merging, Activision Blizzard would be able to offer games via cloud platforms, which would offer users a greater choice of service providers than if all content was locked within the Microsoft ecosystem.

In addition, the CMA felt that Microsoft’s proposed remedies did not go far enough to reassure regulators of the company’s intentions.

Despite offering console support for ten years to rival platforms, the company failed to provide adequate coverage of different cloud gaming business models, including multi-game subscription models.

Microsoft did not offer much to providers who might wish to offer versions of games on operating systems other than Windows, according to the CMA.

Additionally, the Federal Trade Commission has filed a lawsuit to prevent the transaction, asserting that Microsoft’s acquisition of Activision Blizzard may be an overreach.

As evidence of the inadequacy of its assurances, the company cited the late decision to make (Microsoft-owned) Bethesda titles Starfield and Redfall exclusives.

While the European Union initially opposed the deal on similar grounds of competition, it is expected to approve it in the near future.

According to Bobby Kotick, Microsoft will contest the decision, and Microsoft Vice Chairman and President Brad Smith has called the CMA’s decision “flawed” and stated that it appears to represent a flawed understanding of the cloud market and how it functions..”

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