ALBAWABA- The Competition and Markets Authority (C.M.A.), a UK regulatory body, has blocked Microsoft's proposed $69 billion acquisition of video game firm Activision Blizzard, ruling that the tech giant failed to address concerns in the cloud gaming sector.
We’ve prevented @Microsoft from purchasing @Activision over concerns the deal would damage competition in the #CloudGaming market, leading to less innovation and choice for UK #gamers. ☁️https://t.co/SdXt1rYAkZ pic.twitter.com/prWcDI7Evt
— Competition & Markets Authority (@CMAgovUK) April 26, 2023
The decision represents a notable win for regulators seeking to curb the influence of large technology companies. While some observers had suggested that the market for expensive gaming consoles would be the most significant point of concern in the deal, the C.M.A. focused on cloud gaming. The ruling marks a setback for Microsoft, which said it plans to appeal, and for Activision Blizzard, whose shares fell by over 10% in early trading.
The announcement will strengthen the hand of U.S. Federal Trade Commission (F.T.C.) Chair Lina Khan, who has been pushing to challenge mergers involving large tech firms. Amazon is currently facing an antitrust case brought by the F.T.C. The C.M.A.'s decision is also likely to have implications for Microsoft's attempts to isolate Khan by seeking settlements in the E.U. and the U.K. However, E.U. antitrust regulators are still examining the acquisition, and are expected to rule by 22 May.
In its ruling, the C.M.A. stated that the purchase of Activision Blizzard would have given Microsoft too strong a position in the cloud gaming market just as it was starting to grow rapidly. The regulator's decision came despite Microsoft's assurances that it would not restrict Call of Duty, the blockbuster game produced by Activision Blizzard, to its Xbox console. The cloud gaming market is expected to explode in popularity, potentially being worth $1.3 billion in the UK and $14 billion globally by 2026.
