The proposed $69 billion acquisition of Activision Blizzard by Microsoft has been rejected by the Competition and Markets Authority (CMA) of the United Kingdom on the grounds that it will hurt gamers and inhibit innovation.
The response deadline for Microsoft and Activision Blizzard is 22February. On 26April, the CMA is anticipated to make a definitive ruling. The agency began a thorough investigation of the transaction on 1September.
The Activision acquisition, which would bring Call of Duty and other lucrative games to Microsoft’s cloud-based Xbox Game Pass programme, has raised concerns among the CMA that it would boost Microsoft’s position in the cloud gaming market.
Cloud gaming, which enables players to play games online on devices other than a console, is still in its early stages and has not yet reached a wide market.
To learn more about the deal’s possible market effects, the regulator conducted a five-month inquiry. The CMA concluded that the combination would “potentially make Microsoft even stronger in cloud gaming, restricting competition in this burgeoning market and harming UK gamers who cannot afford pricey consoles,” based on its findings.
According to the authority, Microsoft currently controls 60 per cent to 70 per cent of the world’s gaming cloud services, thus the agreement—which would give them access to valuable mobile franchises like Candy Crush—will suppress the market’s competition.
Sony, Microsoft’s competitor in the console market, has so far declined every offer made to them and is adamant about making things difficult for Microsoft.
The CMA wrote in its findings,“The CMA provisionally found that weakening competition by restricting the access that other platforms have to Activision’s games could substantially reduce the competition between Xbox and PlayStation in the UK, in turn harming UK gamers.” CMA further stated that, “reducing this competition between Microsoft and Sony could result in all gamers seeing higher prices, reduced range, lower quality, and worse service in gaming consoles over time.”