Following months of trying to get its Microsoft Activision deal approved by UK regulators, the CMA hasn't ruled in its favour.
Going against what many industry insiders and analysts assumed would be a sure thing, UK regulatory body the Competition and Markets Authority has elected to block Microsoft’s proposed acquisition of Activision Blizzard. This comes after almost a year’s worth of the Xbox giant trying to appease the CMA, making promises that it wouldn’t make Call of Duty an Xbox exclusive as it attempted to alleviate the organisation’s concerns that its Microsoft Activision deal would decrease market competition. It appears to have all been for nothing, and Call of Duty ended up playing a very minor factor.
The CMA's summarised report reads as follows: “The Competition and Markets Authority (CMA) has found that the anticipated acquisition (the Merger) of Activision Blizzard, Inc. (Activision) by Microsoft Corporation (Microsoft) (together, the Parties) may not be expected to result in a substantial lessening of competition (SLC) in console gaming services in the UK. However, the CMA has found that the Merger may be expected to result in an SLC in cloud gaming services in the UK.”
As is made clear in its statement, the CMA’s disapproval of the deal ultimately came down to the sway Microsoft would have in the world of cloud gaming, of which Xbox is a major player through services like Xbox Game Pass where AAA and indie titles alike can be played on mobile. Evidently, the CMA believes that Activision becoming a member of the first-party Xbox family would give it too much dominance when compared to other major players working in the cloud gaming space.
“We found that the Merger would make Microsoft even stronger and substantially reduce competition in this market,” the report went on to say before citing how crucial franchises like Call of Duty, Overwatch and World of Warcraft are to both PlayStation and Xbox’s competitive offerings.
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Microsoft has already offered a response to the CMA’s final ruling, via a tweet from company vice chair and president Brad Smith. “We remain fully committed to this acquisition and will appeal," it reads. "The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom.
“We have already signed contracts to make Activision Blizzard’s popular games available on 150 million more devices, and we remain committed to reinforcing these agreements through regulatory remedies. We’re especially disappointed that after lengthy deliberations, this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works.”
Despite Microsoft’s best efforts to stay positive, there’s no denying that this is a major setback on the road of Activision Blizzard being purchased. CEO of the latter, Bobby Kotick, has since shared his views in a Substack post where he reaffirmed his and Microsoft’s intention to “contest this decision” and that work is already being done to “appeal to the UK Competition Appeals Tribunal”. If the companies do end up trying to appeal the CMA's decision, the process is likely to be drawn out even further.
