2023-04-26 18:09:36
The takeover by Microsoft of Activision Blizzard, which notably publishes the successes “Call of Duty”, “World of Warcraft” and “Candy Crush”, would give birth to the third player in the industry. (Photo: 123RF)
London — The British competition authority (CMA) on Wednesday jeopardized the mega-merger between Microsoft and Activision Blizzard by announcing its decision to block the operation, citing the risks of too much concentration, but the two companies will appeal.
The CMA says it “concerns the deal will change the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for UK gamers in years to come,” according to a statement from the regulator on Wednesday.
London had launched an in-depth investigation in mid-September into this 69 billion US dollar transaction between the online video game giants, a record sum for the sector, made public in early 2022.
The takeover by Microsoft of Activision Blizzard, which notably publishes the successes “Call of Duty”, “World of Warcraft” and “Candy Crush”, would give birth to the third player in the video game industry in terms of turnover, behind Chinese Tencent and Japanese Sony, maker of the PlayStation.
The CMA had considered at the end of March that the operation did not ultimately pose a problem of competition for game consoles, judging “that it would not be commercially advantageous for Microsoft to reserve the exclusivity of Call of Duty on (its console) Xbox”.
But concerns persisted regarding dematerialized gaming services, which offer users the possibility of streaming games, especially on their mobile phones.
“Microsoft has dialogued constructively with us to try to solve these problems (…), but their proposals have not been enough,” said Martin Coleman, chairman of the group of independent experts responsible for this investigation by the CMA.
Microsoft had notably offered to license Activision games, including Call of Duty and World of Warcraft, to certain cloud game providers for a period of 10 years.
But the CMA notes that this only applies “to a defined number of Activision games” and that it would be commercially advantageous, from the point of view of Microsoft, which already accounts for around 60-70% of global cloud game services. , “to make Activision’s games exclusive to its own service.”
Not the last word
“Cloud gaming needs a free and competitive market to drive innovation and (consumer) choice. The best way to achieve this is to allow the current competitive dynamics of cloud gaming to continue,” he added, quoted in the CMA press release.
“We remain fully committed to this acquisition and will appeal,” Microsoft reacted on Wednesday in a statement sent to AFP.
“We are particularly disappointed that following much deliberation, this decision appears to reflect a misunderstanding of this market and how cloud technology actually works,” according to Microsoft.
This decision “contradicts the ambitions of the United Kingdom to become an attractive country to create technology companies”, reprimanded Activision, saying it wanted to “work vigorously with Microsoft to reverse it on appeal”.
“It wasn’t the news we wanted — but it’s far from the last word,” Activison CEO Bobby Kotick said in a message to employees. “We are confident in our case, because the facts are on our side: this agreement is good for competition,” he said.
The merger is also raising concerns across the Atlantic, where the US competition authority (FTC) launched lawsuits in December to block the deal, and in the EU, which has also opened an investigation into whether the acquisition would make Activision’s games exclusive to the Xbox.
The European Commission must decide by May 22.
The UK market is smaller than the US or EU market, but if the London blockade is upheld on appeal, it might force Microsoft to back out of the deal.
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