CMA blocks Microsoft’s acquisition of Activision – a tale of the unexpected

 

CMA blocks Microsoft’s acquisition of Activision – a tale of the unexpected

The UK’s Competition and Markets Authority (CMA) has prohibited Microsoft’s $68.7 billion purchase of Activision Blizzard.

The CMA has found that the transaction may not be expected to result in competition concerns in console gaming services in the UK, but that it may be expected to result in a substantial lessening of competition in cloud gaming services in the UK.

The CMA has decided to block the deal instead of accepting Microsoft’s proposed remedies, stating “significant shortcomings”. According to the CMA, the rejected remedies would be tantamount to requiring the agency to regulate what is the “growing and fast-moving” worldwide cloud gaming sector. Microsoft had proposed to license a set of Activision games to competitors for use in cloud gaming services, but the CMA rejected the proposal. This was mainly because it did not cover different cloud gaming business models and was not fully open to rivals who might want to offer different versions of games other than on the Windows operating system.

This is the second ever CMA prohibition of an acquisition by a major tech giant, following the order to Meta to unwind its acquisition of Giphy.

In the course of the second stage review, the CMA retreated from its initial view that only a divestiture could allay its concerns and focused increasingly on the cloud gaming sector. However the remedy proposals did not go far enough, and the CMA has opposed replacing the pre-merger competitive situation with what it views as ineffective regulation in a dynamic market.

The ban comes about a month before the European Commission is to issue its own findings in its second phase probe. The Commission is currently market testing proposed commitments which also involve licensing. However, other global antitrust authorities, including in South Africa, Brazil, Chile, China and Japan have already cleared the deal, mainly based on licensing commitments.

But this not may be the end of the transaction. Late revisions to the CMA’s provisional findings could form the basis for an appeal.

https://www.gov.uk/government/news/microsoft-activision-deal-prevented-to-protect-innovation-and-choice-in-cloud-gaming