The Competition and Markets Authority in the United Kingdom shocked many when it blocked Microsoft’s acquisition of Activision Blizzard. Contrary to expectation, it expressed concerns over how the deal would impact cloud gaming in the country instead of who gets Call of Duty for how long.
Both companies had strong words regarding the same and said they would appeal the decision. However, the European Commission further stunned the world by recently approving the acquisition, citing Microsoft’s commitment to “fully address the competition concerns identified by the Commission and represent a significant improvement for cloud gaming as compared to the current situation.”
The CMA has addressed this on Twitter. “The UK, US and European competition authorities are unanimous that this merger would harm competition in cloud gaming. The CMA concluded that cloud gaming needs to continue as a free, competitive market to drive innovation and choice in this rapidly evolving sector.
“Microsoft’s proposals, accepted by the European Commission today, would allow Microsoft to set the terms and conditions for this market for the next ten years. They would replace a free, open and competitive market with one subject to ongoing regulation of the games Microsoft sells, the platforms to which it sells them, and the conditions of sale.
“This is one of the reasons the CMA’s independent panel group rejected Microsoft’s proposals and prevented this deal.” While it recognizes and respects the “different view” that the European Commission holds, the CMA “stands by its decision.”
Why doesn’t Microsoft “leave” the UK market over the decision (after paying a $3 billion breakup fee to Activision Blizzard)? Because as noted by the CMA, the company has 60 to 70 percent of the current market share in cloud gaming. After the United States, the UK is an important region for the company, especially given its struggle to establish a foothold in Japan since the OG Xbox days.
As always, time will tell, but even if the CMA reverses its stance, Microsoft and Activision Blizzard still have to contend with the Federal Trade Commission in the United States. After blocking the deal, the FTC made clear in January that there were no “substantive” settlement talks. Stay tuned for more updates in the meantime.
Our response to the European Commission's announcement today on Microsoft/Activision ⬇
[1/5]
— Competition & Markets Authority (@CMAgovUK) May 15, 2023
The UK, US and European competition authorities are unanimous that this merger would harm competition in cloud gaming.
The CMA concluded that cloud gaming needs to continue as a free, competitive market to drive innovation and choice in this rapidly evolving sector.
[2/5]
— Competition & Markets Authority (@CMAgovUK) May 15, 2023
Microsoft’s proposals, accepted by the European Commission today, would allow Microsoft to set the terms and conditions for this market for the next 10 years.
[3/5]
— Competition & Markets Authority (@CMAgovUK) May 15, 2023
They would replace a free, open and competitive market with one subject to ongoing regulation of the games Microsoft sells, the platforms to which it sells them, and the conditions of sale.
[4/5]
— Competition & Markets Authority (@CMAgovUK) May 15, 2023
This is one of the reasons the CMA’s independent panel group rejected Microsoft’s proposals and prevented this deal.
While we recognise and respect that the European Commission is entitled to take a different view, the CMA stands by its decision.
[5/5]
— Competition & Markets Authority (@CMAgovUK) May 15, 2023
