I do not support the idea of mergers and believe that having a few companies in control is not beneficial for the world. However, I find it amusing that the reason the UK’s Competition and Markets Authority blocked Microsoft’s acquisition of Activision Blizzard is to prevent Microsoft from dominating the cloud gaming market. The CMA argued that Microsoft is already so dominant in this market that it could dictate its future, leading to reduced innovation and fewer options for UK gamers in the future.
Ironically, the reason for Microsoft’s dominance is that many of its competitors in the cloud gaming market have failed. Google Stadia and Amazon Luna didn’t gain traction, while Sony got distracted and Nvidia struggled to secure the rights to stream games. Furthermore, 5G technology cannot fully replace game consoles, and Apple has made it difficult for cloud games to run on iPhones.
Despite there being little competition, Microsoft’s xCloud is still not dominant due to the service being bundled with Xbox Game Pass Ultimate subscriptions. The CMA fears that Microsoft’s control could discourage competition and block innovation in the future. Nonetheless, Microsoft promised to sweeten the pot with concessions like offering all its PC games on any eligible cloud service on release day for ten years. This deal could help cloud gaming to establish itself as a popular consumer service and for providers to secure a range of popular games. However, the CMA is concerned that there are few companies with the technology and know-how to compete with Microsoft in this field.
While cloud gaming has a lot of potential, it requires a lot of technological support to function smoothly, including fast internet, low Wi-Fi congestion, and consistent peering arrangements. The CMA is blocking the deal as it is unsure if Microsoft can keep its promise to allow others to use its licenses to stream games. Therefore, the CMA suggests that the only solution is to prohibit the merger, as the risk of circumvention is too high.