The British competition authority (CMA) jeopardized the mega-merger between Microsoft and Activision Blizzard on Wednesday April 26 by announcing its decision to block the operation. The institution invokes the risks of too much concentration, but the computer giant will appeal.
The CMA says “fear that the agreement will change the future of the market for dematerialized games [cloud gaming]fast growing, leading to reduced innovation and less choice for UK gamers in the years to come”according to a communicated of the regulator.
London had launched in mid-September an in-depth investigation into this $ 69 billion transaction between the online video game giants, a record sum for the sector, made public in early 2022.
The acquisition by Microsoft of Activision Blizzard, which publishes in particular the successes call of duty, World of Warcraft And candy Crushwould give birth to the third player in the video game industry in terms of turnover, behind the Chinese Tencent and the Japanese Sony, maker of the PlayStation.
The CMA considered at the end of March that the operation did not ultimately pose a competition problem for game consoles, but that concerns persisted about dematerialized game services.
The European Union had opened an investigation
“Microsoft has engaged constructively with us to try to resolve these issues (…)but their proposals were not enough”said Martin Coleman, chair of the CMA’s Independent Panel of Experts. “Cloud gaming needs a free and competitive marketplace to drive innovation and choice [pour les consommateurs]. The best way to achieve this is to allow the current competitive dynamics of cloud gaming to continue.”he added, quoted in the CMA press release.
“We remain fully committed to this acquisition and will appeal”Microsoft responded Wednesday in a statement sent to Agence France-Presse (AFP). “We are particularly disappointed that after much deliberation, this decision appears to reflect a misunderstanding of this market and how cloud technology actually works”according to Microsoft.
The merger is also raising concerns across the Atlantic, where the US competition authority (FTC) launched lawsuits in December to block the deal, and in the European Union, which has also opened an investigation into whether the acquisition would make Activision’s games exclusive to Xbox.
The UK market is smaller than the US or EU market, but if the London blockade is upheld on appeal, it could force Microsoft to back out of the deal.