The UK antitrust regulator has announced that it will block Microsoft’s purchase of Activision Blizzard due to concerns that the deal would be anti-competitive in the cloud gaming market.
In a press release announcing the block, the Competition and Markets Authority (CMA) said it had blocked Microsoft’s proposed purchase of Activision over concerns the deal would lead to “reduced innovation and fewer choice for UK gamers.” United in the coming years”.
The CMA carefully considered whether the benefit of having Activision’s content available on Game Pass outweighed the damage the merger would do to cloud gaming competition in the UK. The CMA found that this new payment option, while beneficial to some customers, would not outweigh the overall damage to competition (and ultimately UK players) arising from this merger, particularly given the incentive for that Microsoft increase the cost of a Game Pass subscription after the merger to reflect the addition of valuable Activision games.
Microsoft signed a $68.7 billion deal to buy Activision Blizzard, one of the world’s most popular video game publishers, in January 2022. The studio is the maker of hit games like Obligations, Candy Crush, world of warcraftand more.
Had the Microsoft purchase been allowed to proceed, several of Activision’s games would have been moved to Xbox Game Pass, Microsoft’s game subscription service.
Microsoft already enjoys a powerful position and advantage over other competitors in cloud gaming, and this deal would strengthen that advantage by giving it the ability to undercut new and innovative competitors,” said Martin Coleman, chair of the independent panel of experts that conducted the investigation.
Microsoft engaged us constructively in trying to address these issues, and we are grateful for that, but their proposals were ineffective in remedying our concerns and would have replaced competition with ineffective regulation in a dynamic new marketplace.
Cloud gaming needs a free and competitive market to drive innovation and choice. That’s best accomplished by allowing the current competitive dynamics in cloud gaming to continue to do their job.
Microsoft’s acquisition of Activision Blizzard has been cleared by regulators in several other countries, including Brazil, Chile, Japan, Saudi Arabia, Serbia and South Africa, but the company still needs approval from the UK CMA and the European Union to complete the agreement.
The EU Commission has until the end of May to announce its decision. Microsoft has already said that the company will appeal the CMA’s decision. If it fails, Microsoft will owe Activision $3 billion in breakout fees.
Separately in the United States, Microsoft faces additional regulatory pushback from the Federal Trade Commission (FTC), which sued to block Activision Blizzard’s purchase of Microsoft last year. The investigation is ongoing.
Microsoft’s Xbox Game Pass is available on iPhone and iPad through Safari, but not on the App Store. While Apple allows all-in-one game subscription services on the platform, each game offered on the service must be individually submitted for approval through the App Store review process.