In a surprise move, Microsoft’s planned $68.7 billion acquisition of video game publisher Activision Blizzard has been banned by the U.K. regulator, which warned earlier this year that the mega-deal could “harm UK gamers” and competition. “substantially reduce”.
Britain’s Competition and Markets Authority (CMA) released its final findings more than a year after the tech giant unveiled a deal to acquire Activision Blizzard, led by CEO Bobby Kotick.
In its report, the CMA said it believed the merger is expected to result in a “significant reduction in competition” in cloud gaming services in the UK, and that Microsoft would find it “commercially beneficial to make Activision’s titles exclusive for its own cloud gaming service.” Since Microsoft already has an estimated 70-80 percent market share in that market, it claimed that “even a modest increase in Microsoft’s strength can be expected to significantly reduce competition,” which would be “to the detriment of current and future users of cloud gaming” .”
In response, Activision CEO Bobby Kotick vehemently attacked the decision and warned against his future investment in the UK.
“The CMA’s report contradicts the UK’s ambitions to become an attractive country for setting up technology companies,” he wrote. “We will aggressively work with Microsoft to overturn this on appeal. The report’s conclusions are a disservice to British citizens, who face a deteriorating economic outlook. We will reassess our UK growth plans. Global innovators big and small will take note that – for all its rhetoric – the UK is clearly closed for business.”
The acquisition, the largest in Microsoft’s history, would have made the tech powerhouse the world’s third-largest gaming company by revenue after Tencent and Sony. The transaction, which has faced opposition from rivals like Sony and US regulators, would see Microsoft, owner of the Xbox gaming platform and Xbox Game Studios (owner of Bethesda Softworks and 343 Industries, among other game publishers) and Activision, maker of the Duty, Warcraft, Tony Hawk And Candy Crush franchises, reshaping the gaming landscape.
In December, the Federal Trade Commission filed a lawsuit to block the gaming deal, alleging it would allow Microsoft, led by CEO Satya Nadella, to suppress competition in gaming. It pointed to the company’s history of acquiring competitors to “stifle competition from rival consoles,” including its purchase of ZeniMax, the parent company of Bethesda Softworks and maker of The older scrolls, Fallout And Star field.