The regulator said that Microsoft's proposed solutions were not sufficiently open to providers who might want to offer versions of games on PC operating systems other than Windows and did not properly cover other cloud gaming service business models
Microsoft's $68.7bn acquisition of Activision Blizzard blocked by UK CMA. (Credit: Coolcaesar/Wikipedia.org)
The UK Competition and Markets Authority (CMA) has blocked Microsoft’s previously announced $68.7bn acquisition of Activision Blizzard over concerns that it would stifle the cloud gaming market.
According to the British competition watchdog, the deal would result in reduced innovation and less choice for UK gamers over the coming years.
The CMA said that the decision to block the acquisition has come following the failure of Microsoft’s proposed remedies to satisfactorily address the concerns outlined in its provisional findings published in February 2023.
The in-depth phase 2 probe into Microsoft’s acquisition of the US-based video game holding company was launched in September 2022 by the regulator.
Following nearly five months of a deeper investigation, the UK CMA provisionally found that the merger would bolster Microsoft’s dominant position and significantly hinder the competition that the technology major would otherwise face in the cloud gaming market in the UK.
Citing the evidence available to it, the regulator stated that if the merger is prevented, then Activision would start offering games via cloud platforms in the future, allowing UK gamers to avoid buying expensive gaming consoles and PCs.
The UK CMA said that Microsoft’s proposed solutions were not sufficiently open to providers who might want to offer versions of games on PC operating systems other than Windows and did not properly cover other cloud gaming service business models.
Besides, Microsoft’s remedies would standardise the terms and conditions on which games are available, said the regulator.
CMA independent panel of experts chair Martin Coleman said: “Microsoft already enjoys a powerful position and head start over other competitors in cloud gaming and this deal would strengthen that advantage giving it the ability to undermine new and innovative competitors.
“Microsoft engaged constructively with us to try to address these issues and we are grateful for that, but their proposals were not effective to remedy our concerns and would have replaced competition with ineffective regulation in a new and dynamic market.
“Cloud gaming needs a free, competitive market to drive innovation and choice. That is best achieved by allowing the current competitive dynamics in cloud gaming to continue to do their job.”
The all-cash deal between Microsoft and Activision Blizzard was announced in January 2022. As per the terms of the transaction, Microsoft was expected to pay $95 per share to shareholders of the publicly-listed Activision Blizzard.