The UK's Competition and Markets Authority (CMA) has blocked the Microsoft – Activision Blizzard deal, the biggest in gaming history.
The primary concern that the CMA had over the acquisition was because of cloud gaming. They noted that UK's cloud gaming market was “growing fast.”
Monthly active users in the UK more than tripled from the start of 2021 to the end of 2022. It is forecast to be worth up to £11 billion globally and £1 billion in the UK by 2026. By way of comparison, sales of recorded music in the UK in 2021 amounted to £1.1billion.
As such, the CMA was worried that Microsoft's acquisition of Activision-Blizzard would give them an unfair advantage. According to them, “Microsoft already accounts for an estimated 60-70% of global cloud gaming services”. Not just that, but Microsft also owns “Xbox, the leading PC operating system (Windows) and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming).”
Because of this, the CMA is worried that, should the deal go through, this would allow Microsoft to use well-known games such as Call of Duty, Overwatch, and World of Warcraft to their advantage. They said that should Microsoft acquire the game company, they would be able to place said games on their Cloud gaming service. This would tip the scales to Microsoft's side, as more players would prefer to subscribe to their Cloud gaming service compared to others.
The cloud allows UK gamers to avoid buying expensive gaming consoles and PCs and gives them much more flexibility and choice as to how they play. Allowing Microsoft to take such a strong position in the cloud gaming market just as it begins to grow rapidly would risk undermining the innovation that is crucial to the development of these opportunities.
Although Microsoft submitted a proposal to address some of the CMA's concerns, the CMA found that it had some significant shortcomings regarding cloud gaming. According to them:
- 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 in a statement said that both companies plan to appeal the decision. Activision Blizzard CEO Bobby Kotick said that “Alongside Microsoft, we can and will contest this decision, and we’ve already begun the work to appeal to the UK Competition Appeals Tribunal,”. Microsoft President Brad Smith, on the other hand, said that “This decision appears to reflect a flawed understanding of the market and the way the relevant cloud technology actually works.”
We will have to wait for the result of this appeal in the future. However, things aren't looking good. Despite the public being mostly okay with the deal, the UK CMA already had previous concerns about the deal. Not only that, but the UK also sent them an antitrust warning. We will keep you updated should there be an update about the situation.
That's all the information we have about the UK CMA blocking the Microsoft – Activision Blizzard deal. Check out our gaming news articles for the latest in gaming news.
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