On April 26th, 2023, the UK’s Competition and Markets Authority (CMA) blocked Microsoft’s proposed acquisition of Activision Blizzard Inc. for $69 billion. The CMA cited concerns over the potential impact on the cloud gaming market, which could lead to higher prices and less choice for consumers.
Background
Microsoft’s bid for Activision, one of the world’s largest video game publishers, was announced in January 2023. The deal was expected to be a major boost for Microsoft‘s gaming division and its cloud gaming platform, which has become increasingly important as the gaming industry shifts towards streaming services.
UK Competition Concerns
The CMA’s concerns focused on the potential impact of the deal on the cloud gaming market, where Microsoft is already a dominant player. The CMA argued that the acquisition would give Microsoft even greater control over the industry and could limit competition, leading to higher prices and fewer options for consumers.
Reaction from Microsoft and Activision
Microsoft expressed disappointment with the CMA’s decision and said it would consider its options. Activision, meanwhile, said it was “surprised and disappointed” by the CMA’s decision and would work with Microsoft to explore other options.
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Potential Impact on the Gaming Industry
The CMA’s decision could have significant implications for the gaming industry. The acquisition would have given Microsoft control over some of the most popular video game franchises, including Call of Duty, World of Warcraft, and Candy Crush. It also would have given Microsoft access to Activision’s vast network of gaming studios, which could have helped bolster its cloud gaming platform.
However, the CMA’s decision means that Microsoft will have to look elsewhere for growth opportunities in the gaming industry. It also means that other companies may be more willing to pursue their own acquisitions and mergers in the gaming industry, as the CMA’s decision suggests that regulators are paying close attention to potential anti-competitive behavior.