The UK’s Competition and Market Authority (CMA) has made the unilateral decision to block Microsoft’s acquisition of developer and publisher Activision, in a stunning turn of events. The move is a U-turn from when the government’s initial thoughts last month, when it had “a significant amount of new evidence” obtained by the British regulatory body in favour of the video game company.
The CMA says that its decision stop the Activision deal from going forward was also due to Microsoft failing to come up with another solution amidst concerns in the cloud gaming sector, after the previous proposal fell through the floor.
The CMA’s move is a bit of a surprise, given that all the signs prior to this seem to point toward Microsoft’s favour, stating that such an acquisition would “not result in a substantial lessening of competition in relation to console gaming in the UK”. The body further found that the company, whose global cloud gaming services already account between 60% and 70% of the market, would certainly find it more in their favour, as it would allow them to make certain currently existing titles from Activision exclusive. Call of Duty is a prime example.
“The deal would reinforce Microsoft’s advantage in the market by giving it control over important gaming content such as Call of Duty, Overwatch, and World of Warcraft. The evidence available to the CMA indicates that, absent the merger, Activision would start providing games via cloud platforms in the foreseeable future,” said the CMA in its official press release.
Below are the three key points the CMA listed with regard to its action against Microsoft:
- It did not sufficiently cover different cloud gaming service business models, including multigame subscription services.
- It was not sufficiently open to providers who might wish to offer versions of games on PC operating systems other than Windows.
- It would standardise the terms and conditions on which games are available, as opposed to them being determined by the dynamism and creativity of competition in the market, as would be expected in the absence of the merger.
In a letter to PCGamer, Microsoft told the PC tech publication that it would be appealing the CMA’s decision to block its acquisition of Activision, stating that the move was made from a “flawed understanding of this market and the way the relevant cloud technology actually works”.
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