The UK has blocked Microsoft‘s proposed £55billion ($69billion) purchase of Activision Blizzard. The news was revealed in a tweet by the Competition & Markets Authority (CMA) that claimed the deal would “damage competition in the cloud gaming market, leading to less innovation and choice for UK gamers”.
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In the CMA’s official judgement they claimed that while the addition of Activision’s games to Xbox Game Pass would be beneficial for some consumers, it “would not outweigh the overall harm to competition.”
In quotes attributed to Martin Coleman, who chaired the panel conducting the investigation, the statement said:
“Gaming is the UK’s largest entertainment sector. Cloud gaming is growing fast with the potential to change gaming by altering the way games are played, freeing people from the need to rely on expensive consoles and gaming PCs and giving them more choice over how and where they play games. This means that it is vital that we protect competition in this emerging and exciting market.”
His quotes pointed to Microsoft’s “powerful position and head start” in the cloud gaming space and suggested that the deal would only serve to strengthen that advantage.
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/prWcDI7Evt
— Competition & Markets Authority (@CMAgovUK) April 26, 2023
“Microsoft engaged constructively with us to try to address these issues and we are grateful for that, but their proposals were not effective to remedy our concerns and would have replaced competition with ineffective regulation in a new and dynamic market.” added Coleman.
In a tweet by Chris Dring, the head of GamesIndustry.biz, Dring claimed that Microsoft is committed to the deal and will appeal, while Activision is also planning to work with Microsoft to get the decision reversed.
The CMA had previously found that it provisionally had no problems with the impact of the deal on console markets as it had found Microsoft “would not have a financial incentive to make Call of Duty exclusive to Xbox.” The statement also acknowledges that Microsoft did try to work with the CMA to get the deal across the line, so this could be just another element of the complicated acquisition process rather than a definitive end to things.