Gaming
Microsoft to appeal block on Activision Blizzard deal by UK watchdog
April 26, 2023
Microsoft will appeal the decision by the UK's competition regulator to block its record $68.7 billion purchase of video game publisher Activision Blizzard.
The Competition and Market Authority raised concerns that the deal would impact competition in the growing cloud gaming sector. Not only would the deal give Microsoft ownership of several iconic video game franchises iconic franchises such as "Warcraft" and "Call of Duty," but it would also include Activision Blizzard's global esports business, which includes Major League Gaming.
"The CMA's decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the UK, "said Brad Smith, Microsoft's vice chair and president, in a statement.
He added: "We’re especially disappointed that after lengthy deliberations, this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works."
Microsoft had plans to use the deal to expand the portfolio of games it offers through its Xbox Game Pass cloud gaming service. However, the CMA said the merger could give Microsoft too much control over important gaming content, stifling innovation in the market. According to Infiniti Research, the cloud gaming market is expected to grow by $5.73 billion between 2022 and 2026, at a compound annual growth rate of 31.1%.
Microsoft previously submitted a proposal to address these concerns, but the CMA said it was insufficient. The tech giant reportedly hoped to ally the CMA's concerns by offering its rival, Sony, a 10-year agreement guaranteeing to release "Call of Duty" games on PlayStation consoles, but Sony refused the offer, saying that blocking the deal was the only way to preserve competition.
"Microsoft already enjoys a powerful position and head start over other competitors in cloud gaming and this deal would strengthen that advantage giving it the ability to undermine new and innovative competitors," said Martin Coleman, chair of the CMA panel of experts reviewing the deal, in a statement.
The deal, which was announced in January 2022, has been on hold since the CMA's US counterpart, the Federal Trade Commission, sued to block the deal in December after several lawmakers raised concerns. EU regulators are also currently reviewing the deal with a provisional deadline of May 22.
The proposed purchase followed a wave of consolidation in the video game industry that hit a peak in 2021 for total deals completed and continued into this year. On April 17, Japanese game studio Sega offered to buy "Angry Birds" maker Rovio for $776 million.
Featured image by vfhnb12/Shutterstock
The Competition and Market Authority raised concerns that the deal would impact competition in the growing cloud gaming sector. Not only would the deal give Microsoft ownership of several iconic video game franchises iconic franchises such as "Warcraft" and "Call of Duty," but it would also include Activision Blizzard's global esports business, which includes Major League Gaming.
"The CMA's decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the UK, "said Brad Smith, Microsoft's vice chair and president, in a statement.
He added: "We’re especially disappointed that after lengthy deliberations, this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works."
Microsoft had plans to use the deal to expand the portfolio of games it offers through its Xbox Game Pass cloud gaming service. However, the CMA said the merger could give Microsoft too much control over important gaming content, stifling innovation in the market. According to Infiniti Research, the cloud gaming market is expected to grow by $5.73 billion between 2022 and 2026, at a compound annual growth rate of 31.1%.
Microsoft previously submitted a proposal to address these concerns, but the CMA said it was insufficient. The tech giant reportedly hoped to ally the CMA's concerns by offering its rival, Sony, a 10-year agreement guaranteeing to release "Call of Duty" games on PlayStation consoles, but Sony refused the offer, saying that blocking the deal was the only way to preserve competition.
"Microsoft already enjoys a powerful position and head start over other competitors in cloud gaming and this deal would strengthen that advantage giving it the ability to undermine new and innovative competitors," said Martin Coleman, chair of the CMA panel of experts reviewing the deal, in a statement.
The deal, which was announced in January 2022, has been on hold since the CMA's US counterpart, the Federal Trade Commission, sued to block the deal in December after several lawmakers raised concerns. EU regulators are also currently reviewing the deal with a provisional deadline of May 22.
The proposed purchase followed a wave of consolidation in the video game industry that hit a peak in 2021 for total deals completed and continued into this year. On April 17, Japanese game studio Sega offered to buy "Angry Birds" maker Rovio for $776 million.
Featured image by vfhnb12/Shutterstock
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