Activision Blizzard has hit out after the Competition and Markets Authority blocked the largest acquisition in the history of gaming.
The publisher, which has a base in Warrington, was the subject of a £55bn acquisition by Microsoft.
But the UK’s CMA has blocked the move, stating it would “alter the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for UK gamers over the years to come.”
Activision, which makes CoD, World of Warcraft and Candy Crush is likely to appeal the ruling, and last night a spokesperson said:
“The CMA’s report contradicts the ambitions of the UK to become an attractive country to build technology businesses. 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.”
Microsoft is also likely to launch an appeal.
“The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the UK,” said Microsoft Vice Chair and President, Brad Smith.
“We have already signed contracts to make Activision Blizzard’s popular games available on 150m more devices, and we remain committed to reinforcing these agreements through regulatory remedies. We’re especially disappointed that after lengthy deliberations, this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works.”
The CMA began an in-depth review of the deal in September and in February announced that it could stifle competition in the cloud gaming market, as Microsoft already accounts for around 60-70% of the sector.
In response to the provisional ruling, Microsoft offered a number of remedies, but the CMA said its proposal contained “a number of significant shortcomings.”
- “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.”
Martin Coleman, who chaired the panel of independent experts stated:
“Gaming is the UK’s largest entertainment sector. Cloud gaming is growing fast with the potential to change gaming by altering the way games are played, freeing people from the need to rely on expensive consoles and gaming PCs and giving them more choice over how and where they play games. This means that it is vital that we protect competition in this emerging and exciting market.
“Microsoft already enjoys a powerful position and head start over other competitors in cloud gaming and this deal would strengthen that advantage giving it the ability to undermine new and innovative competitors.
“Microsoft engaged constructively with us to try to address these issues and we are grateful for that, but their proposals were not effective to remedy our concerns and would have replaced competition with ineffective regulation in a new and dynamic market.
“Cloud gaming needs a free, competitive market to drive innovation and choice. That is best achieved by allowing the current competitive dynamics in cloud gaming to continue to do their job.”
The UK is the first to make comment on the deal, with the EU having opened an investigation under EU Merger Regulation and the US Federal Trade Commission also examining the acquisition.
