The acquisition of Activision Blizzard by Microsoft has been suspended by the UK’s Competition and Markets Authority (CMA).
The CMA clarified its decision by stating the fact that the deal is blocked mainly due to the effects it would have on the cloud gaming market.
The CMA said it blocked Microsoft’s acquisition of Activision because it was worried the merger would change the direction of the rapidly expanding cloud gaming business and limit future innovation and options for UK gamers.
The regulatory authority contended that Microsoft’s suggested remedies had “significant shortcomings” and, had they been implemented, would have needed CMA control. The CMA said that rejecting the agreement would permit market forces to continue working and guiding the growth of the cloud gaming industry
Microsoft criticized the choice in a public statement: “The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom. We’re especially disappointed that after lengthy deliberations, this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works.”
Many had expected the CMA to approve the merger after it said in a statement it had made in March that one of its three main concerns had been resolved by fresh information. However, the decision represents a remarkable turnabout.
The UK regulator’s decision in February to provisionally reject the merger, citing concerns that it would lead to higher costs, less options or less innovation for gamers in the country, presented the first huddle.
Including the CMA, several competition watchdogs are looking into the deal. The US Federal Trade Commission (FTC) filed a lawsuit to stop the merger in December 2022 which was a foreshadowing of the deal’s intense regulatory scrutiny.
After Microsoft provided solutions to some of its original concerns, the European Commission, which is in charge of the EU’s investigation, extended the deadline for its investigation to May. In a few areas, like Saudi Arabia and Brazil, the acquisition has already received permission.
Activision Blizzard CEO Bobby Kotick expressed his frustration at the challenges and holdups in an email to staff that was made public, but he added that this was far from the “final word” on the purchase
