UK Competition Markets Authority Moves to Block Microsoft Acquisition of Activision Blizzard

Blizzard Posted 2023/04/26 at 12:19 PM by Archimtiros

block Microsoft's $69 billion acquisition of Activision BlizzardCMA ReasoningThe CMA's press releasePress Release

Competition and Markets Authority

The deal would reinforce Microsoft’s advantage in the market by giving it control over important gaming content such as Call of Duty, Overwatch, and World of Warcraft. The evidence available to the CMA indicates that, absent the merger, Activision would start providing games via cloud platforms in the foreseeable future.

The cloud allows UK gamers to avoid buying expensive gaming consoles and PCs and gives them much more flexibility and choice as to how they play. Allowing Microsoft to take such a strong position in the cloud gaming market just as it begins to grow rapidly would risk undermining the innovation that is crucial to the development of these opportunities.

Microsoft’s proposal contained a number of significant shortcomings connected with the growing and fast-moving nature of cloud gaming services:

It did not sufficiently cover different cloud gaming service business models, including multigame subscription services.
It was not sufficiently open to providers who might wish to offer versions of games on PC operating systems other than Windows.
It would standardise the terms and conditions on which games are available, as opposed to them being determined by the dynamism and creativity of competition in the market, as would be expected in the absence of the merger.

Accepting Microsoft’s remedy would inevitably require some degree of regulatory oversight by the CMA. By contrast, preventing the merger would effectively allow market forces to continue to operate and shape the development of cloud gaming without this regulatory intervention.

The CMA carefully considered whether the benefit of having Activision’s content available on Game Pass outweighed the harm that the merger would cause to competition in cloud gaming in the UK. The CMA found that this new payment option, while beneficial to some customers, would not outweigh the overall harm to competition (and, ultimately, UK gamers) arising from this merger, particularly given the incentive for Microsoft to increase the cost of a Game Pass subscription post-merger to reflect the addition of Activision’s valuable games.Activision ResponseBobby Kotick commenting

Bobby Kotick

Team,

Today, the Competition and Markets Authority (CMA), a regulatory agency in the UK, decided not to approve our merger with Microsoft. This isn’t the news we wanted – but it is far from the final word on this deal.

Alongside Microsoft, we can and will contest this decision, and we’ve already begun the work to appeal to the UK Competition Appeals Tribunal. We’re confident in our case because the facts are on our side: this deal is good for competition.

The UK hopes to grow its leadership position in technology, and a combined Microsoft-Activision would accomplish exactly that. At a time when the fields of machine learning and artificial intelligence are thriving, we know the UK market would benefit from Microsoft’s bench strength in both domains, as well as our ability to put those technologies to use immediately. By contrast, if the CMA’s decision holds, it would stifle investment, competition, and job creation throughout the UK gaming industry.

This merger is a complex process, and I know I’m not the only one frustrated by the hurdles and delays. We’re accustomed to a company culture that moves quickly to accomplish big goals, so it’s tough when we can’t close things out at our usual energetic pace. We’ll keep pressing our case, because we know that this merger will benefit our employees, the broader UK tech workforce, and players around the world.

I’m going to do everything I personally can to advocate for us and help regulators understand the competitive dynamics in our industry. What gives me confidence is that, whether on our own or united with another company, we are one of the strongest companies in our industry, poised for continued growth, and building on our incredible IP.

I appreciate your continued hard work and focus, and for continuing to connect and engage our players around the world. This is the best time to be in our field, and you all represent the best of our industry. We’ll be sure to keep you updated on next steps as they happen.

With appreciation,

Bobby
Bobby Kotick also commented on previouslyComments from MicrosoftBrad Smith echoed similar sentimentsOther Coveragefuture deal with the UKLooking ForwardFOSS Patents blog highlights these further

The European Commission is set to make a decision on May 22nd, which could have a few different outcomes as per EC antitrust chief Margrethe Vestager.

The U.S. Federal Trade Commission is facing increased political pressure, though while Microsoft was previously expected to close the deal despite the FTC's suit, a trial in August now seems very likely.

Private lawsuits in the United States are also now more likely to proceed, with less pressure on time.

Regulators in Australia and New Zealand wanted to wait for outcomes in other jurisdictions.

FOSS Patents

The saga could have been over soon, but instead it looks like it could take longer than expected, if not much longer. That is a shame, but I still hope to see Microsoft's plans for a universal mobile app store materialize. That is one of the important procompetitive benefits of the transaction that the CMA, for whatever reason or no reason, doesn't seem to care about.

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Comment by BwgmonDamage competition in cloud gaming? What?Comment by zomgzblocking it over cloud gaming concerns seems like a really weird angleComment by Nylereiathe UK does nothing but produce massive "L"sComment by Archimtirosblocking it over cloud gaming concerns seems like a really weird angleyearsComment by HappiiLet's not overreact, we just need to invade Britain, throw all the yorkshire tea in the channel, and force them to allow the merger to go through.

Still silly how the uk can stop a US company merger lol. Like microsoft should just say "fine, no microsoft products or games for the uk".Comment by Squizzlewhy does it seem that so many people hate us blizzard gamers? the acquisition is the best thing that could happen. its a joke of what activision and their stock holders have made out of blizzard and its games, literally anything is a step forward.

but what to expect from a country that voted for the brexit and is wondering afterwards why the economy is rock bottom .Comment by Zee3Remember guys, government agencies know better than you!Comment by nozzlegearWow that’s crazy. This whole thing with Kotick and M$ reminds me of something my good friend Jeffrey Atkins once said:

Selfishness is the key quality that all successful people share. To be the best at what you do in any field, and to accomplish the goals you set for yourself, you have to be somewhat selfish.Comment by BifflinThe cloud allows UK gamers to avoid buying expensive gaming consoles and PCs and gives them much more flexibility and choice as to how they play. Allowing Microsoft to take such a strong position in the cloud gaming market just as it begins to grow rapidly would risk undermining the innovation that is crucial to the development of these opportunities.Comment by CarsInTheSkyMergers are damaging to everyone, there is no benefit in a market completely saturated by one who owns all, as they are the only ones to come out on top.

Huge W for the CMAComment by kowaikokoroAfter making their population on average poorer with the brexit strategy ( spoiler alert: people still fish and make profit on your water boomer aint no regulation changing that ) they now want to regulate the ''competitive cloud gaming'' lmao this will not go over well for england 💀Comment by UrhWoVyYou guys think you want the merger but you don'tComment by nevevo6They are not 'moving to block'

They HAVE BLOCKED.

EU will always follow the CMA action.

There's absolutely no benefit to the merger for gamers. Look what happened to blizzard when it was merged with Activision, do you really think Microsoft will make it any better? Absolutely not.

99% of all revenue and sales goes to investors like bobby. Check the yearly public revenue. 0.1% goes to expansions, development costs,servers blizzard staff ect. This will have absolutely ZERO impact on the players. This is the reason our games get bundled with trash like cash shops, battlepass and other #$%^.

One thing is for sure, bobby's time at blizzard is at an end :)Comment by MalsWe’re confident in our case because the facts are on our side: this deal is good for competition.Comment by ArchimtirosThey are not 'moving to block'

There is an appeals process (although it is lengthy and you could certainly argue that it's still "blocked" in the meantime), as well as various concessions that ATVI could make in order to secure approval from the regulator. These things are high-stakes negotiations, where nothing is set in stone.

If we want to be equally pedantic, the merger could still be completed if Microsoft simply chose not to market their services in the UK. Obviously this is extremely unlikely, but technically speaking the UK isn't blocking them from merging so much as blocking them from merging if they want to market their services there.

One thing is for sure, bobby's time at blizzard is at an end :)stay at the head of ATVIComment by zymanskihDeal as good as dead since US, EU and Chinese regulators already signaled that they will also block it.Comment by SPF18Mergers are damaging to everyone, there is no benefit in a market completely saturated by one who owns all, as they are the only ones to come out on top.

Huge W for the CMA
One thing is for sure, bobby's time at blizzard is at an end :)Comment by morfthegreatlet's hope now, that bobby share take a huge fall.Comment by TeacoonPeople crying about Monopolies yet nobody ever gets on Sony or Disney's ass to the extent they need to be. The game industry has plenty of competition in it with the inclusion of STEAM that actually gives Indie developers a platform to host their games.Comment by glowpipeWonder how much sony paid to have this happen

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