The UK has prevented Microsoft’s acquisition of video game publisher Activision Blizzard, worth $69 billion, on the grounds that it would harm competition in cloud gaming. The decision came as a surprise and dealt a blow to what would be the largest gaming deal in history. The Competition and Markets Authority (CMA) has stated that Microsoft’s proposed solution of granting access to Activision’s “Call of Duty” franchise to top cloud gaming platforms would not effectively remedy its concerns.
Activision Blizzard has expressed its intentions to work with Microsoft in reversing the decision, while Microsoft confirmed in a statement that it would appeal the verdict. Activision has also stated that it would aggressively work with Microsoft to revert the decision. However, the antitrust regulator’s decision has led to Activision’s shares plummeting more than 10% in US pre-market trading.
Last month, the CMA had dropped its concerns about the impact of the deal on the console market, which is currently led by Sony’s PlayStation. Therefore, cloud streaming services remained the sole obstacle to the deal, which Microsoft attempted to overcome by signing licensing agreements with Valve Corp, Nvidia, and Boosteroid. In addition, Microsoft had offered Sony, who was a vocal opponent of the deal, a “Call of Duty” license for ten years, as part of the agreement to introduce the multi-billion-dollar franchise to Nintendo’s Switch.
In response to the UK’s decision, Activision has claimed that it will reassess its growth plans for the country, and expressed disappointment that the UK is “clearly closed for business.” This unexpected ruling has forced Microsoft to reconsider its plans for the UK market. Europe will decide on the deal by May 22, while the United States’ Federal Trade Commission is also seeking to block it.