What you need to know
- Microsoft is currently working to finish the acquisition of Activision Blizzard for almost $69 billion.
- The deal has been under intense regulatory scrutiny over the past year, with the FTC in the U.S. seeking to block the purchase entirely.
- The CMA in the United Kingdom, which once raised a number of possible issues with deal, has now blocked the purchase.
- It’s unclear what will happen from here.
Microsoft’s bid for its biggest acquisition ever just took a huge step backwards.
The CMA in the United Kingdom shared that it has blocked Microsoft’s purchase of Activision Blizzard. The CMA examined the proposed purchase over the past several months, notably raising concerns earlier in the year that the deal could harm competition. The CMA claims that it is blocking the deal over concerns in the cloud market, despite Microsoft working tirelessly to sign deals for competing cloud platforms to gain access to Call of Duty and other games.
A few weeks ago, the CMA revised and narrowed its list of concerns, accepting evidence that Microsoft would not be inclined to remove the Call of Duty franchise from competing console platforms outside of Xbox, specifically, away from PlayStation. It seems that Microsoft didn’t do enough to secure the confidence of the CMA.
We’ve prevented @Microsoft from purchasing @Activision over concerns the deal would damage competition in the #CloudGaming market, leading to less innovation and choice for UK #gamers. ☁️https://t.co/SdXt1rYAkZ pic.twitter.com/prWcDI7EvtApril 26, 2023
The UK is the first major regulator to block the deal, in contradiction to regulators that have approved, including Brazil, Chile, Japan, Serbia, and Saudi Arabia, with South African regulators also recommending approval for the deal. Microsoft still needs approval from the European Commission and the SAMR in China before the purchase can officially be consummated, while the FTC in the U.S. is seeking to stop the merger from happening. However, there’s a report that Microsoft could seek to close the ABK deal without the approval of the FTC in the United States, owing to the FTC’s apparent reluctance to seek an injunction in the federal court system.
It’s unclear what will happen from here with the CMA having blocked the deal. The appeals process for CMA regulatory rulings is difficult to overcome. In the past, tech companies like Facebook have simply walked away from acquisition attempts after the CMA ruled to block.
Windows Central’s take
The CMA’s arguments that the cloud gaming market could be harmed somehow by this acquisition flies in the face of reality, and could simply have been taken up as an excuse to avoid having to argue in Sony’s favor as market leader. Microsoft has offered to include Call of Duty etc. in cloud platforms including NVIDIA’s GeForce Now, which as a result of this ruling, will no longer get access to Call of Duty.
This decision makes absolutely no sense, but that’s par for the course with the British establishment, who is becoming well-versed in making self-damaging decisions in recent years. It’s unclear what Microsoft will do from here, if, indeed, it can do anything.
