...By Henry George for TDPel Media.
UK watchdog, Competition and Markets Authority (CMA), has blocked Microsoft’s $69bn takeover of gaming giant Activision Blizzard.
The deal has been called off due to fears that Microsoft’s acquisition would give it too much control over the growing cloud gaming market.
The tech giant had hoped to add popular titles such as Call of Duty and Crash Bandicoot to its Xbox Game Pass platform, with the aim of attracting more subscribers.
However, the CMA found that the proposed merger could limit competition in the sector, leading to higher prices, fewer choices and less innovation for UK gamers playing in the cloud.
Cloud gaming concerns
The CMA opened an investigation into the takeover last year and dropped concerns about console gaming.
However, it found issues with cloud gaming, where games are streamed online from remote servers.
The watchdog concluded that the merger could unfairly limit Microsoft’s competitors in the industry, as the company already controls 60-70% of the cloud gaming market.
The watchdog also noted concerns that future Activision games would have to be exclusive to Xbox and PC, which would mean that PlayStation users would miss out.
Microsoft’s proposed solutions
Microsoft addressed the concerns and proposed solutions to CMA regarding which games would be offered to which platforms.
The company signed cloud gaming deals with Boosteroid, Ubitus, and Nvidia to bring Xbox PC games to these services.
It also signed a similar deal with Nintendo in December.
However, the CMA found the proposals “contained a number of significant shortcomings” and stated that preventing the sale would allow market forces to operate and shape the development of cloud gaming without regulatory intervention.
Appealing the decision
Microsoft intends to appeal the CMA’s decision, stating that the regulator’s decision discourages technology innovation and investment in the UK.
An Activision Blizzard spokesperson said that the publisher would work with Microsoft on the appeal and called the CMA’s decision a “disservice to UK citizens.”
Regulators in Saudi Arabia, Brazil, Chile, Serbia, Japan, and South Africa have approved the deal, while the EU and US regulators are yet to give their verdicts.
The CMA’s decision may influence their positions on the merger.