The UK’s Competition and Markets Authority (CMA) has blocked Microsoft’s proposed $68.7 billion acquisition of Activision Blizzard, the popular video game maker responsible for hit titles such as Call of Duty and World of Warcraft. The CMA expressed its worries that the Xbox maker could gain too much advantage and reduce innovation in the every-expanding cloud gaming market.
Microsoft already controls an estimated 60%-70% of the global cloud gaming market, and the acquisition raised a number of red flags that the company could use the deal to further its position by making some of its most attractive games exclusive to its platforms. This could have comprised opportunity for other cloud gaming providers, and left gamers with less choice.
Mr. Martin Coleman of the CMA’s independent investigative panel felt that the strong market position enjoyed by Microsoft prior to the deal was likely to be advanced by the acquisition, and detrimental to potential competitors. He noted that cloud gaming needs a competitive market to drive innovation and give gamers multiple options, and that without Microsoft’s position, innovative cloud gaming could develop.
Microsoft is said to be disappointed with the CMA’s decision and is initiating an appeal. In response to the news, Microsoft’s president Dr. Brad Smith stated that the acquisition still has his full commitment. Similarly, Activision CEO Bobby Kotick described the CMA’s decision as “a disservice to UK citizens” and highlighted the potential benefits to brick-and-mortar gamers with the acquisition.
The CMA’s ruling is only the first of its kind, and will be followed by decisions from the competition regulators in the EU and US. If the deal is ultimately blocked, Microsoft will have to pay a break fee of $3 billion.
Microsoft is an American multinational technology company founded in 1975 and headquartered in Washington, D.C. It specializes in the manufacture and development of computer software, consumer electronics, and other related services. Microsoft is known for its suite of products, ranging from the classic Windows operating system to Office productivity suite, gaming consoles, and its cloud computing service, Azure. It is one of the world’s largest companies in terms of revenue and has been listed in the Fortune 500 since 1996.
Ioanna is a writer at The Next Web (TNW), an onlilne publisher that offers in-depth coverage of the tech industry. Ioanna has a background in the humanities, and holds a particular interest in startups, sustainability, green tech, AI, and EU policy. She is passionate about promoting technologies that have a positive social impact, and her work covers the entire range of the European tech environment.
