The Competition and Markets Authority (CMA) of the United Kingdom has reaffirmed its intention to halt Microsoft’s large acquisition of Activision Blizzard, citing worries about the impact on competition in the cloud gaming sector. Microsoft would become the world’s third-largest gaming firm, with direct control over major games like Call of Duty and World of Warcraft.
The CMA has been investigating the merger since July 2021 and has expressed concerns about higher prices, less choice, and less innovation for UK gamers. In its latest statement, the CMA concluded that acquiring Activision’s gaming portfolio would “significantly reduce competition” in the cloud gaming market and that Microsoft would be incentivised to withhold games from competing platforms.
The CMA also noted that Microsoft’s proposed remedy for the situation did not address various areas, including the business models of various cloud game services and providers who wanted to offer games on non-Windows operating systems.
The acquisition has also drawn criticism in other regions of the world. The US Federal Trade Commission (FTC) has filed a lawsuit to block the acquisition. Still, Microsoft recently won another private antitrust lawsuit filed by a gamer to be dismissed. In Europe, a detailed investigation has been under consideration for some time, and early reports suggest that Europe may allow the deal after Microsoft offers further relief.
However, the UK’s decision to block the merger sets a precedent for the future, and Microsoft has contested the decision, saying it would “disrupt investment, competition and job creation across the UK gaming industry.” Microsoft’s vice chairman and president Brad Smith also wrote on Twitter that the decision “appears to reflect a flawed understanding of how this market and related cloud technologies actually work.”
The UK’s decision to block Microsoft’s acquisition of Activision Blizzard highlights the importance of competition and innovation in the cloud gaming market. The CMA’s worries about the impact on competition and choice for UK gamers must be taken seriously. How Microsoft will respond to the ruling and the consequences for the gaming industry’s future remains to be seen.