Competition: London blocks Microsoft’s purchase of Activision Blizzard

London blocks Microsoft’s purchase of Activision Blizzard

Activision Blizzard produces popular and very lucrative games like “Call of Duty”, “Overwatch” and “World of Warcraft”. photo

© Jae C. Hong/AP/dpa

Microsoft has been trying for a long time to buy the Activision Blizzard games company with hits like “Call of Duty”. After US supervisors, British antitrust authorities are now also putting obstacles in the way of the deal.

There is a new major hurdle for the planned mega takeover of the video game company Activision Blizzard by Microsoft: British competition watchdogs have blocked the deal.

The reason for this is concern that the deal, which is worth around 69 billion dollars, could distort competition in the growing market for cloud gaming, said the supervisory authority CMA. Microsoft plans to appeal the decision.

In the USA, the FTC regulator is already suing against the largest takeover in the industry announced at the beginning of 2022. A decision by the EU antitrust authorities is still pending. Activision Blizzard produces popular and very lucrative games like “Call of Duty”, “Overwatch” and “World of Warcraft”.

Surprising decision

Microsoft has a strong position in the video game business played over the Internet. The CMA analysis showed that it could be commercially advantageous for the Xbox group to hold back Activision titles such as “Call of Duty” for just one cloud service. The British competition authorities had largely withdrawn their initial concerns about the console market after criticism from Microsoft. That is why the ban decision came as a surprise to some market observers.

The Windows group had tried to dispel the concerns with concessions. Microsoft made deals with cloud gaming providers like Nvidia that would give them access to Activision Blizzard games for ten years. However, the CMA found that the agreements were insufficient, in part because some cloud business models and non-Windows operating systems were left out.

Microsoft executive Brad Smith said UK regulators had rejected a pragmatic solution to their concerns and risked hurting investment and innovation in their country.

Microsoft and Activision Blizzard originally wanted to complete the acquisition by mid-July. If the deal fails due to resistance from the authorities, the games group is entitled to three billion dollars from Microsoft.

Last year, the British competition authorities had already managed to get the Facebook group Meta to sell the clip platform Giphy, which it had taken over in 2020.


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