Microsoft’s plan to acquire game developer Activision Blizzard for $69 billion was opposed by the UK’s Competition and Markets Authority (CMA). The CMA believes the deal will lead to higher prices, less choice and less innovation in the cloud gaming market.
Microsoft president Brad Smith expressed dissatisfaction with the CMA’s decision, saying it was “bad for the UK”. He told the BBC: “Not only has this shaken our confidence in the future opportunities of growing tech businesses in the UK, but it’s a challenge we’ve never faced before. People are shocked, and disappointed, people’s confidence in UK tech has been shattered. Seriously shaken. There’s a clear message here – the EU is a better place to start a business than the UK.”
Smith also said that Microsoft has committed to providing long-term, equal access to Call of Duty to platforms such as Sony, Nintendo, Steam and others, and that 75% of respondents to the CMA’s public consultation “agreed that the deal would be good for the competitiveness of the UK games industry.” “.
Sarah Cardell, chief executive of the CMA, defended the regulator’s move, saying: “I think this decision shows how important it is to support competition in the UK, and that the UK is a fully open market. We want to create an environment, enabling a wide variety of companies to compete, grow and innovate effectively.”
The reason why CMA blocked Microsoft’s plan to acquire Blizzard was mainly that it believed that doing so would give Microsoft a huge advantage in the emerging but rapidly growing cloud gaming market and weaken competition in this market. According to the CMA, cloud gaming is the fastest-growing segment of the gaming industry, while consoles are a mature market. Microsoft already has a 60-70% global share of cloud gaming services, and has other trump cards: Xbox, leading PC operating system Windows, and cloud service provider Azure.
Microsoft has agreed to make some Blizzard games available on some cloud platforms, including Nvidia, Boosteroid and Ubitus. But the CMA said Microsoft’s proposal ignores competing subscription models — gaming services like Netflix, or PC providers that don’t use Windows. “(Microsoft’s) proposals do not address our concerns and would replace competition in an emerging and dynamic market with ineffective regulation,” the CMA said.
Microsoft has said it will appeal the CMA’s decision, but that could take months to complete. Even if the appeal succeeds in overturning the regulator’s judgment, it would mean the deal would be sent back to the CMA for a new decision.