The UK’s Competition and Markets Authority has weighed in on Microsoft’s proposed Activision purchase, saying the deal could hurt gamers.
Microsoft announced its intention to purchase Activision Blizzard for some $69 billion. The deal met hurdles and criticism almost immediately, with regulators and competitors claiming the deal could hurt the gaming market, as well as the overall PC market.
The CMA has been investigating the deal for months, upgrading its investigation from Phase 1 to Phase 2 after discovering reasons for concern. The CMA has now concluded that the deal would negatively impact gamers and the gaming market.
The CMA provisionally found that being able to offer popular games will be important for cloud gaming providers to attract users as the market continues to grow and develop. The evidence available to the CMA currently indicates that Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own cloud gaming service (or only available on other services under materially worse conditions). Microsoft already accounts for an estimated 60-70% of global cloud gaming services and also has other important strengths in cloud gaming from owning Xbox, the leading PC operating system (Windows) and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming).
The CMA provisionally found that buying one of the world’s most important game publishers would reinforce this strong position and substantially reduce the competition that Microsoft would otherwise face in the cloud gaming market in the UK. This could alter the future of gaming, potentially harming UK gamers, particularly those who cannot afford or do not want to buy an expensive gaming console or gaming PC.
The CMA’s findings are just the latest challenge Microsoft is facing in its efforts to close the deal. The EU is challenging the deal and the FTC has sued to block it.
Given this latest setback, the chances of Microsoft completing its acquisition are looking increasingly slim.