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Microsoft Activision Blizzard Deal Blocked by the CMA

Microsoft’s $68.7 billion deal to buy Activision Blizzard has been blocked in the UK, by the Competition and Markets Authority.

Microsoft announced the acquisition in January, 2022. The CMA began its investigation into the deal in September, 2022. The CMA’s decision will prevent Microsoft from being able to purchase Activision Blizzard.

The initial concerns – and the bulk of the conversation around the deal – first centred on the idea that it would negatively impact Microsoft’s main rival, Sony. And most of the debate revolved around Call of Duty, being one of the biggest games on the planet.

However, the CMA’s decision, in the end, hinged on cloud gaming. This from the CMA’s press release regarding its decision:

“Microsoft has a strong position in cloud gaming services and the evidence available to the CMA showed that Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own cloud gaming service.

“Microsoft already accounts for an estimated 60-70% of global cloud gaming services and has other important strengths in cloud gaming from owning Xbox, the leading PC operating system (Windows) and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming).

“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.”

This feels strange. The idea that the decision would eventually come down to cloud gaming, rather than the games themselves, is a surreal outcome. But there you go.

A spokesperson from Activision Blizzard has addressed the CMA’s decision and has said that the company will try to appeal it:

“The CMA’s report contradicts the ambitions of the UK to become an attractive country to build technology businesses. 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.”

We will have to keep our eyes on the appeals process, as Microsoft will also await the decisions of the Federal Trade Commission, in the United States, and of the European Commission.

( Photo credit Xbox News )



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