UK Regulator Blocks Microsoft's Acquisition of Activision Blizzard

The UK Competition and Markets Authority has decided to prevent Microsoft's $68.7 billion deal to buy Activision.

The decision was announced in a press release today...

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. The final decision to prevent the deal comes after Microsoft's proposed solution failed to effectively address the concerns in the cloud gaming sector, outlined in the Competition and Markets Authority's (CMA) provisional findings published in February.


Microsoft entered into a $68.7 billion deal to buy Activision, one of the most popular video games publishers in the world, in January 2022. The CMA launched an in-depth review of the deal in September 2022, and in February 2023 provisionally found that the merger could make Microsoft even stronger in cloud gaming, stifling competition in this growing market.

Microsoft had submitted a proposal to address the CMA's concerns; however, the regulator found the proposal to contain a number of significant shortcomings connected with the growing and fast-moving nature of cloud gaming services:

● It did not sufficiently cover different cloud gaming service business models, including multigame subscription services.
● It was not sufficiently open to providers who might wish to offer versions of games on PC operating systems other than Windows.
● It would standardise the terms and conditions on which games are available, as opposed to them being determined by the dynamism and creativity of competition in the market, as would be expected in the absence of the merger.

Microsoft and Activision plan to appeal this decision. Activision Blizzard CEO Bobby Kotick sent the following email to employees on Wednesday:


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Team,

Today, the Competition and Markets Authority (CMA), a regulatory agency in the UK, decided not to approve our merger with Microsoft. This isn't the news we wanted – but it is far from the final word on this deal.

Alongside Microsoft, we can and will contest this decision, and we've already begun the work to appeal to the UK Competition Appeals Tribunal. We're confident in our case because the facts are on our side: this deal is good for competition.

The UK hopes to grow its leadership position in technology, and a combined Microsoft-Activision would accomplish exactly that. At a time when the fields of machine learning and artificial intelligence are thriving, we know the UK market would benefit from Microsoft's bench strength in both domains, as well as our ability to put those technologies to use immediately. By contrast, if the CMA's decision holds, it would stifle investment, competition, and job creation throughout the UK gaming industry.

This merger is a complex process, and I know I'm not the only one frustrated by the hurdles and delays. We're accustomed to a company culture that moves quickly to accomplish big goals, so it's tough when we can't close things out at our usual energetic pace. We'll keep pressing our case, because we know that this merger will benefit our employees, the broader UK tech workforce, and players around the world.

I'm going to do everything I personally can to advocate for us and help regulators understand the competitive dynamics in our industry. What gives me confidence is that, whether on our own or united with another company, we are one of the strongest companies in our industry, poised for continued growth, and building on our incredible IP.

I appreciate your continued hard work and focus, and for continuing to connect and engage our players around the world. This is the best time to be in our field, and you all represent the best of our industry. We'll be sure to keep you updated on next steps as they happen.

With appreciation,

Bobby
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Notably, the FTC has also sued to block Microsoft's acquisition of Activision Blizzard. Please download the iClarified app or follow iClarified on Twitter, Facebook, YouTube, and RSS for further updates.