Microsoft’s proposed $69 billion acquisition of Activision Blizzard King has been blocked by the UK’s Competitions and Markets Authority (CMA), citing concerns over reduced competition and innovation for gamers in the UK. The CMA had previously released its provisional findings on the buyout, which included concerns over exclusivity for games such as Overwatch, Diablo, and Call of Duty. However, the regulator’s final decision was based on the potential impact on the fast-growing cloud gaming market.
The CMA estimates that cloud gaming will be worth £11 billion globally and £1 billion in the UK by 2026. Currently, Microsoft accounts for 60-70% of global cloud gaming services, giving them a significant advantage. The CMA believes that approving the buyout would risk undermining the innovation necessary for the development of cloud gaming opportunities.
Microsoft had responded to the CMA’s provisional findings, but their solution failed to address the regulator’s concerns. The CMA found multiple shortcomings in Microsoft’s proposal, including the company’s lack of openness to PC operating systems other than Windows. Microsoft had signed multiple deals before the CMA’s decision, committing to releasing games on rival streaming providers and console manufacturers in the future.
Microsoft president Brad Smith announced that Microsoft would appeal the decision, stating that they had already signed contracts to make Activision Blizzard’s games available on 150 million more devices. Activision Blizzard had also expressed disappointment, stating that they would work aggressively with Microsoft to reverse the decision on appeal. The company believes that the CMA’s report’s conclusions are a disservice to UK citizens, who face increasingly dire economic prospects.
The US Federal Trade Commission had already filed suit to block the deal, but Microsoft is moving forward with the acquisition regardless. The CMA’s decision will delay the acquisition, as Microsoft will likely need to address the regulator’s concerns before the deal can proceed. The acquisition would have been one of the largest in the gaming industry’s history, creating a significant player in the industry’s cloud gaming market.