After months of investigation, The U.K.’s antitrust watchdog has rejected Microsoft’s $75 billion acquisition of Activision Blizzard in order to safeguard innovation in the fast-growing cloud gaming market.
“The final decision to prevent the deal comes after Microsoft’s proposed solution failed to effectively address the concerns in the cloud gaming sector, outlined in the Competition and Markets Authority’s (CMA) provisional findings published in February,” said the CMA.
“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.”
In January 2022, Microsoft announced that it would acquire Call of Duty maker Activision Blizzard for $68.7 billion in cash. The CMA began a thorough investigation of the merger in September 2022, and it tentatively concluded in February 2023 that it may make Microsoft even more dominant in cloud gaming, restricting competition in this growing market.
“We remain fully committed to this acquisition and will appeal,” Microsoft president Brad Smith said. “The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom.
“We have already signed contracts to make Activision Blizzard’s popular games available on 150m more devices, and we remain committed to reinforcing these agreements through regulatory remedies. We’re especially disappointed that after lengthy deliberations, this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works.”
Activision Blizzard criticized the decision as a “disservice to UK citizens, who face increasingly dire economic prospects.”
“The CMA’s report contradicts the ambitions of the UK to become an attractive country to build technology businesses,” an Activision Blizzard spokesperson said. “We will work aggressively with Microsoft to reverse this on appeal. The report’s conclusions are a disservice to UK citizens, who face increasingly dire economic prospects. We will reassess our growth plans for the UK. Global innovators large and small will take note that – despite all its rhetoric – the UK is clearly closed for business.”
Regulators from the European Union and the U.S. Federal Trade Commission are also investigating the transaction. Although the U.K.’s judgment would not directly affect those other procedures, such international agreements normally require the approval of the most powerful authorities in the world in order to progress.
The deadline for the European Commission’s own decision is May 22. On the other hand, a hearing for the matter in the FTC’s administrative court has been set for August.