2023-04-26 11:20:58
The decision has been expected for many months and marks a major challenge for Microsoft’s proposed takeover of Activision Blizzard: the UK competition authority has blocked the takeover.
The teams of lawyers from Microsoft and Activision will have to start again. While it seemed to have changed its mind after being rather unfavorable at the origin, the CMA, the competition authority in the United Kingdom, has just announced the blocking of the proposed takeover of Activision Blizzard King by Microsoft.
This announcement is very important, it is a major brake on the project carried out by Microsoft since the announcement of the takeover on January 18, 2022, in one of the four major territories to decide on the takeover. The firm must also face an attempt to block in the United States and the uncertainty of the decision of China and the European Union.
Cloud gaming was key
In February 2023, the CMA was worried about two aspects of the takeover: the future of the game console market against PlayStation and that of cloud gaming where Microsoft already has a big lead. The first fear was dismissed in March when the CMA came to the conclusion that PlayStation would not be endangered by this takeover.
Regarding the second fear, the numerous agreements signed by Microsoft with its competitors in cloud gaming to guarantee access to its games do not seem to have extinguished the CMA’s fears.
The final decision to block the takeover comes after Microsoft’s proposed solution failed to effectively address cloud gaming industry concerns outlined in the Competition and Markets Authority’s (CMA) interim findings. published in February.
Microsoft did not convince
According to the CMA, the cloud gaming market is growing. In this market, Microsoft already occupies 60 to 70% of the British market share. The takeover would involve Microsoft taking over juicy licenses like Call of Duty, Overwatch et World of Warcraft which could strengthen this lead.
Microsoft engaged constructively with us to try to resolve these issues and we appreciate that, but their proposals failed to address our concerns and would have replaced competition with ineffective regulation in a new and dynamic.
The agreements signed by Microsoft did not convince, because according to the CMA, they do not cover enough economic models. Indeed, Microsoft has mainly signed with services where it is necessary to buy the games, like GeForce Now, rather than catalog services, like the Xbox Game Pass. In addition, the CMA points out that the agreements did not allow service providers to break away from Windows for their infrastructure, always giving an advantage to Microsoft.
Microsoft and Activision are already preparing their appeal
Microsoft was the first to react to this decision with a tweet from Microsoft president Brad Smith, announcing that they wanted to appeal.
We remain fully committed to our acquisition with @ATVI_AB and will appeal today’s determination by the CMA. Here’s our statement. pic.twitter.com/ylvDP5RUqQ
— Brad Smith (@BradSmi) April 26, 2023
Activision Blizzard’s reaction by press voice is, unsurprisingly, in solidarity with Microsoft’s decision to appeal. The tone used by the Activision spokesperson is a little more muscular: ” we will work aggressively with Microsoft to appeal this decision “. The spokesperson bluntly states that “ The UK is demonstrably closed for business ” and ” the report’s findings do a disservice to British citizens ».
And now ?
The European Union is expected to be the next major court to deliver its verdict. The deadline is May 22, 2023. With a first refusal in the United States and now in the United Kingdom, the takeover project is starting to seriously falter.
If Microsoft and Activision indicate today that they wish to continue the fight, this means that they would embark on fairly long legal battles. The lawsuit with the FTC alone could last several years. The two firms can abandon the takeover project at any time despite the current communication.
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