UK Regulator Blocks Microsoft-Activision Takeover, Sparks Controversy
The Competition and Markets Authority (CMA) in the UK has blocked Microsoft's $68.7bn (£55bn) deal to purchase US video game company Activision Blizzard. This decision came after the regulator expressed concerns that the deal would result in reduced innovation and fewer choices for gamers in the fast-growing cloud gaming business. The proposed acquisition would have given Microsoft ownership of some of the biggest gaming titles, such as Call of Duty and Candy Crush.
Both Microsoft and Activision have criticised the decision and plan to appeal it. Activision's spokesperson said that the CMA's report "contradicts the ambitions of the UK to become an attractive country to build technology businesses," while Microsoft's vice chairman and president, Brad Smith, stated that the CMA's decision would "discourage technology innovation and investment in the United Kingdom." Smith also mentioned that Microsoft had already signed contracts to make Activision Blizzard's games available on 150 million more devices.
The CMA is the first of the three regulatory bodies that need to approve the deal, with the United States and the European Union still to rule. The UK regulator stated that it was not concerned about the deal's impact on competition in the console gaming market, but it was vital to protect competition in the emerging market of cloud gaming. Martin Coleman, who chaired an independent panel that investigated the proposal for the regulator, said that the deal would give Microsoft an advantage that could undermine new and innovative competitors.
The proposed acquisition is important for Microsoft as it wants to strengthen its position in the future gaming market, particularly in the area of cloud gaming. The company hopes to eventually create a Netflix-style service for gaming where users can stream titles rather than owning them. This move will help Microsoft to compete with rivals like Sony and Nintendo, who have traditionally been ahead in terms of the quality of their games.
The CMA's decision has come as a shock to the UK games industry, which had expected the deal to be approved. Sony bosses, on the other hand, are pleased with the decision as they had opposed the deal, arguing that its PlayStation would have restricted access to some of the world's most popular titles, which would be bad for gamers.
Industry experts speculate that Microsoft and Activision Blizzard may have to make significant concessions to address the CMA's concerns if they hope to get the deal approved. These could include divesting some of their assets, offering guarantees for competition in the market, or other structural changes.
This development is a major setback for Microsoft's ambitions in the cloud gaming sector, which has emerged as a key battleground for the future of the video game industry. With the pandemic-driven surge in demand for digital entertainment, cloud gaming has become increasingly popular among gamers looking for convenient, low-latency access to a wide range of titles.
The failure of this deal could have significant implications for the gaming industry in the UK and beyond. It raises questions about the UK's stance on foreign investment in technology companies, particularly given the country's ambitions to become a leading hub for tech innovation and investment.
Despite the setback, Microsoft and Activision Blizzard are likely to continue pursuing the deal, given the significant potential benefits it offers in terms of expanding their reach and influence in the global gaming market. The companies are expected to appeal the CMA's decision and seek approval from other regulatory bodies in the US and EU.
In the meantime, the UK gaming industry is left to ponder the implications of this decision for their future prospects. While the CMA's decision is a clear signal of the regulator's commitment to protecting competition in the market, it also highlights the challenges faced by smaller players in the industry, who may struggle to compete with larger, more established firms in the fast-changing world of cloud gaming.
Ultimately, the future of the gaming industry may hinge on the ability of regulators and industry players to strike a balance between promoting innovation and competition while safeguarding the interests of consumers and smaller players in the market. As the battle over the Microsoft-Activision Blizzard deal continues, it is clear that this is a challenge that will require ongoing attention and engagement from all stakeholders.