Microsoft’s proposed $68.7 billion acquisition of Activision has been blocked by the UK’s Competition and Markets Authority (CMA).
The decision was made because the CMA was concerned that Microsoft‘s acquisition of the popular video game publisher would negatively impact the future of the cloud gaming industry, resulting in less innovation and fewer options for UK gamers in the coming years.
In February 2023, the CMA’s review found that the merger could reinforce Microsoft’s already dominant position in cloud gaming, further stifling competition in the growing market.
Cloud gaming concerns
As the market is rapidly expanding, the monthly active users have tripled from the start of 2021 to the end of 2022. By 2026, it is predicted to be worth up to £11 billion globally and £1 billion in the UK, compared to the £1.1 billion recorded music sales in the UK in 2021.
Microsoft’s proposal would have given the Windows company control over important content from some of the world’s most acclaimed titles like Call of Duty, Overwatch, and World of Warcraft, reinforcing its already estimated 60-70% share of the global cloud gaming services 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,” said Martin Coleman, chair of the independent panel of experts conducting this investigation.
The Windows company tried to fix some issues that the CMA had pointed out, but their proposal didn’t address all the problems with cloud gaming. After going over the proposal, the CMA found that it didn’t work for all kinds of cloud gaming services, didn’t work with other PCs, and it wouldn’t allow companies to compete freely.
Market should remain competitive
The CMA concluded that Microsoft’s acquisition of Activision would strengthen Microsoft’s advantage in the market, allowing it to undermine new and innovative competitors.
Ultimately, the CMA has blocked Microsoft’s acquisition of Activision due to concerns that it would negatively impact the cloud gaming market, leading to less innovation and fewer options for UK gamers.
“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,” added Coleman.
The CMA also analysed the impact of the acquisition and concluded that the benefits of having Activision’s content on Game Pass would not outweigh the harm caused by the merger.
Isa Muhammad is a writer and video game journalist covering many aspects of entertainment media including the film industry. He's steadily writing his way to the sharp end of journalism and enjoys staying informed. If he's not reading, playing video games or catching up on his favourite TV series, then he's probably writing about them.
