Whoa: UK’s CMA Blocks Microsoft’s Acquisition Of Activision Blizzard

Policy

from the it's-not-over-yet dept

We’ve been following the entire saga of Microsoft’s proposed acquisition of Activision Blizzard for some time now. The whole thing has been decidedly messy, for various reasons. For starters, there are three main regulatory bodies that most of us have been waiting to hear from: the UK’s CMA, the USA’s FTC, and the EU. And those bodies have been in different places and on different timelines to date. The EU gave its tacit approval to the deal, while the FTC signaled it wanted more information before making any decisions, while the CMA has voiced some very serious concerns about approving the deal. If you’re an American reading this, you may be conditioned to roll your eyes at all of this talk of regulation. The FTC in this country has behaved largely as though it lacks fangs when it comes to antitrust activity.

Which is why it may come as a surprise that the UK’s CMA has issued its final report in favor of blocking the purchase entirely.

The final report cites Microsoft’s “strong position” in the cloud-gaming sector, where the company has an estimated 60 to 70 percent market share that makes it “already much stronger than its rivals.” After purchasing Activision, the CMA says Microsoft “would find it commercially beneficial to make Activision’s titles exclusive to its own cloud gaming service.”

As to all of those largely cloud-gaming based deals Microsoft inked to keep AAA titles like Call of Duty on those platforms and the company’s argument that this showed its commitment to robust competition and non-exclusivity in the market, well:

Specifically, the CMA said Microsoft’s proposed remedy doesn’t sufficiently cover “multigame subscription services,” or providers working with “games on PC operating systems other than Windows.” Microsoft’s proposed standardized cloud-gaming licensing terms would also prevent those deals from being “determined by the dynamism and creativity of competition in the market” the CMA said.

“Accepting Microsoft’s remedy would inevitably require some degree of regulatory oversight by the CMA,” the regulator said in a press release. “By contrast, preventing the merger would effectively allow market forces to continue to operate and shape the development of cloud gaming without this regulatory intervention.”

What a breath of fresh air. Whether you agree with the CMA’s assessment or not, it’s quite nice to see a regulatory body show its teeth a bit, particularly when the focus is squarely on which outcome actually benefits the market and consumers more.

Now, all of this comes with the stipulation that Microsoft can, and will, appeal this decision. And, as you might expect, the promise to appeal comes along with Activision and Microsoft throwing all kinds of public temper tantrums over the final report.

“The CMA’s report contradicts the ambitions of the UK to become an attractive country to build technology businesses,” Activision Blizzard’s Joe Christinat said in a statement provided to Ars Technica. “We will work aggressively with Microsoft to reverse this on appeal. The report’s conclusions are a disservice to UK citizens, who face increasingly dire economic prospects. We will reassess our growth plans for the UK. Global innovators large and small will take note that—despite all its rhetoric—the UK is clearly closed for business.”

Trying to read that statement without rolling your eyes takes the kind of fortitude of which I am not made. And, frankly, this only effects the UK market. But, and here’s where this might be more important, the decision does serve as a first-to-plunge rejection with the FTC’s suit to block the deal having not even begun yet, and with the EU’s formal decision not yet in place.

So the real question isn’t solely what happens in the UK, but how this decision might effect the decisions of the EU and American markets, which represent huge risks to this deal.

Filed Under: antitrust, cloud gaming, cma, competition, speculative, uk
Companies: activision, activision blizzard, microsoft