The Competition and Markets Authority in the UK has just prevented the massive merger between Microsoft and Activision-Blizzard in an enormous blow to the deal.
The Microsoft-Activision merger has seen a series of hurdles, specifically from the UK regulator, the Competition and Markets Authority, or CMA, which oversees and regulates healthy competition in the country. While provisional findings earlier in March looked positive, concerns still lingered over the company’s potential dominance over cloud gaming services in the country. In a final ruling today, the CMA has prevented the merger from going through.
Why Did the CMA Block the Deal?
According to the CMA in their findings today:
The deal would reinforce Microsoft’s advantage in the market by giving it control over important gaming content such as Call of Duty, Overwatch, and World of Warcraft. The evidence available to the CMA indicates that, absent the merger, Activision would start providing games via cloud platforms in the foreseeable future.
The report goes on to say:
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.
Ultimately, the regulator determined that to keep the cloud gaming market competitive, there would need to be ongoing oversight by the organization for the foreseeable future. This regulation and oversight could lead to disagreements, as commercial interests often run contrary to regulatory concerns.
On the other hand, in the CMA’s conclusion, just blocking the merger altogether would circumvent the cloud gaming issue and perpetuate strong competition in the cloud gaming market.
What’s Next?
It looks like Activision will actively appeal the decision to try to overturn it.
According to a Politico:
Activision has said it will “work aggressively” with Microsoft to overturn the U.K. competition regulator’s decision to block Microsoft’s proposed takeover of the game developer.
As reported previously, the FTC case is still ongoing in the United States, so even if the company does make it over the hurdle of satisfying the CMA, it may have another challenge in the FTC case.
Only time will tell whether their efforts will be effective, and any prediction for potential outcomes or conclusions would be entirely speculatory at this point.
We will be following updates on this story in our news section.
