After months of deliberation, the UK government’s Competition and Markets Authority has decided to block Xbox’s takeover of Activision Blizzard, primarily due to concerns over cloud gaming. The CMA says it made its decision after analyzing the implications for cloud gaming, as Microsoft’s deal would “disrupt the future of the fast-growing cloud gaming market, leading to reduced innovation and fewer options for UK players in the coming years,” the watchdog organization wrote in its government website.
The CMA noted that Xbox making Activision Blizzard games like Call of Duty exclusive to their consoles didn’t make any business sense. But Microsoft had not addressed concerns the group had related to cloud gaming, especially since Microsoft had a “strong position” in that market.
“Microsoft has a strong position in cloud gaming services and the evidence available to the CMA showed that it would be commercially beneficial for Microsoft to make Activision’s games exclusive to its own cloud gaming service,” it said. “The deal would strengthen Microsoft’s market advantage by giving it control of important game content like Call of Duty, Overwatch and World of Warcraft.”
Responding to the verdict, Microsoft President Brad Smith said the company had already signed contracts to make Activision Blizzard’s popular games available on an additional 150 million devices and remained committed to strengthening these agreements through solutions. regulatory. “We are especially disappointed that after lengthy deliberation, this decision appears to reflect a misunderstanding of this market and the way the relevant cloud technology actually works.”
Microsoft’s next step will be to appeal the CMA verdict. Bobby Kotick, CEO of Activision He added that Microsoft and Activision Blizzard are confident in their case as the deal is “good for competition” and will ultimately help the UK increase its leadership position in technology.
In a statement from Activision Blizzard, the company says that “the CMA report contradicts the UK’s ambitions to become an attractive country to build technology businesses” and that the report’s conclusions are a “disadvantage to UK citizens.” Kingdom” which are already under intense stress from the “dreadful” economic outlook.
“We will reassess our growth plans for the UK. Global innovators big and small will take note that for all their rhetoric, the UK is clearly closed for business.”
The CMA had originally raised these concerns in February, highlighting several issues that Microsoft would need to address if it wanted the deal to pass in the UK. This included concerns that Microsoft was not sufficiently covering the different business models of cloud gaming services and that the company was not being open enough to vendors who wanted to offer alternative versions of games on non-Windows PC operating systems, among others. several other possible problems.
This led the CMA to see a potential risk of disagreement between Microsoft and other cloud gaming service providers in an evolving market, and if such a scenario were to occur, it would require CMA intervention and regulation rather than allow the regular market forces operate smoothly.
Before the CMA decision, it seemed like a quiet acquisition for Microsoft as the deal had won approvals in Saudi Arabia, Brazil, Serbia, Chile, South Africa and Japan. The deal has not yet been approved in the US and has led the Federal Trade Commission to sue Microsoft to block the acquisition. a battle that Microsoft is defending for how he addresses the court.
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