The UK’s Competition and Markets Authority (CMA) has blocked Microsoft’s $68.7 billion deal to buy Activision Blizzard. Why? Because they’re worried it could mess with the growing cloud gaming market, meaning less innovation and fewer options for UK gamers down the road. The CMA dug through over 3 million documents from both companies and even checked out more than 2,100 public emails before making their decision.
Prior to the UK Competition and Markets Authority’s (CMA) decision to block Microsoft’s proposed acquisition of Activision Blizzard, the software company attempted to address concerns about the impact on the cloud gaming market. As part of these efforts, Microsoft secured cloud gaming partnerships with a number of companies including Boosteroid, Ubitus, and NVIDIA, allowing Xbox PC games to run on their rival platforms, following a similar arrangement made with Nintendo in December. The agreements which spanned a decade were also structured to include access to games produced by Activision Blizzard, provided that the merger received regulatory approval.
The CMA, however, examined these deals and identified several significant limitations in relation to the delivery of cloud gaming services. Specifically, the authority found the agreements to be “too limited in scope” due to the associated model requiring users to acquire the right to play games by purchasing them from certain stores or subscribing to certain services. Additionally, the agreements failed to include provisions that would enable Microsoft to provide access to these games on other rival multi-game subscription services or for these games to be offered on PC operating systems other than Windows.
Microsoft will be appealing the decision. Here’s a tweet from Brad Smith, Microsoft’s vice chair and president.
The deal has received approval from regulatory bodies in several countries including Saudi Arabia, Brazil, Chile, Serbia, Japan, and South Africa.
Microsoft is facing regulatory hurdles not only in the UK but also in the US, as the Federal Trade Commission (FTC) continues to scrutinize the proposed acquisition of Activision Blizzard. The FTC has already sued to block the deal and is still investigating the matter. An evidentiary hearing, scheduled for August 2nd, may uncover rare details on gaming industry exclusivity deals if relevant documentation is made public.