For several months now, Microsoft has been in a struggle to obtain approval from the UK regarding its acquisition of Activision Blizzard. However, it appears that the final verdict did not end up in its favor. The UK has officially prohibited Microsoft from acquiring Activision Blizzard, and the primary reason behind this decision is related to concerns regarding cloud gaming.
As Microsoft’s $68.7 billion acquisition deal of Blizzard Entertainment awaits approval in the UK, the country’s Competition and Markets Authority (CMA) has ruled against it. The CMA stated that the potential deal could result in Microsoft becoming a dominant player in the cloud gaming market, which would likely limit competition and reduce choices for UK gamers in the future.
Microsoft revealed its plan to acquire Activision Blizzard in January 2022, which would bring the major game franchises like Call of Duty, Overwatch, and World of Warcraft under the same roof as Xbox. However, the proposed acquisition sparked concerns regarding the availability of games across other platforms, especially with Call of Duty’s presence on PlayStation. The UK’s Competition and Markets Authority has been scrutinizing the deal for over a year now.
Just when it seemed like Microsoft was on the brink of gaining approval for its acquisition of Activision Blizzard, the UK’s Competition and Markets Authority (CMA) announced its decision to block the deal. The CMA’s decision reflects growing scrutiny and concern over the concentration of power in the gaming industry, as large tech companies like Microsoft continue to acquire major players in the space. It remains to be seen what Microsoft’s next steps will be in light of this decision.
Martin Coleman, Panel Chair of the CMA explains:
"Cloud gaming needs a free, competitive market to drive innovation and choice. 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.”
According to the CMA, Microsoft’s dominance in the global cloud gaming market, estimated at 60-70% through Windows and Xbox, was a significant concern in the potential acquisition of Blizzard Entertainment. The regulator also noted that Microsoft’s potential to make Call of Duty games exclusive to its Xbox Game Pass service would give the company an unfair advantage over competitors.
Microsoft is not giving up on its efforts to acquire Activision Blizzard, despite the UK’s decision to block the deal due to concerns over cloud gaming competition. In a statement to The Verge, Microsoft confirmed that it plans to appeal the decision and remains committed to the acquisition. The company argues that the decision is flawed and discourages technology innovation and investment in the UK, and that it has already signed contracts to make Activision Blizzard’s games available on 150 million more devices. Microsoft also stated that it is committed to reinforcing these agreements through regulatory remedies.