Shock! UK blocks Microsoft's Activision Blizzard acquisition
"On this basis, the CMA has decided to prohibit the Merger."
The UK Competition & Markets Authority (CMA) has opted to prohibit the Activision Blizzard King x Microsoft merger, as announced in its final report released today.
While the organisation found the merger would not substantially affect competition among console services, it did conclude that it may result in less competition in the cloud gaming space. This appears to have been the silver bullet to the approval process and the main reason the CMA has opted to prohibit the deal.
The final statement states: "In relation to cloud gaming services, we found that Microsoft already has a strong position. It owns a popular gaming platform (Xbox and a large portfolio of games), the leading PC operating system (Windows), and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming), giving it important advantages in running a cloud gaming service. With an estimated 60-70% market share in global cloud gaming services, it is already much stronger than its rivals."
It continues: "We found that the merger would make Microsoft even stronger and substantially reduce competition in this market. We found that Activision's titles — including CoD, World of Warcraft, and Overwatch — will be important for the competitive offering of cloud gaming services as the market continues to grow and develop. We found that, after the Merger, Microsoft would find it commercially beneficial to make Activision's titles exclusive to its own cloud gaming service. Given its already strong position, even a moderate increment to Microsoft's strength may be expected to substantially reduce competition in this developing market, to the detriment of current and future cloud gaming users."
While Microsoft presented a remedy to these concerns in the form of Microsoft Cloud Remedy, the CMA found several shortcomings that resulted in their fear of substantial-lessening of competition in cloud gaming.
Following this announcement, vice chair and CEO of Microsoft Brad Smith released a statement on Twitter expressing their displeasure with the result. It states: "We remain fully commited to this acquisition and will appeal. The CMA's decision rejects a pragmatic path to address competition concerns and ddiscourages technology innovation and investment in the United Kingdom."
Okay, so what does this mean? As stated by Smith, an appeal on this decision is likely, but it's another major barrier blocking the gigantic merger between Microsoft and ABK. We're also due to see the final decision from the European Commission, which postponed its decision until May 22. With the UK leaning towards their future "valley of death" in Bobby Koticks words, all eyes are on Europe as the deal stumbles over the British Isles.
What do you think of this decision? Let us know below.
