Microsoft Acquisition of Activision Blizzard Blocked by UK Regulator

Another hurdle to overcome.

Blizzard Activision Stock down

The UK’s Competition and Markets Authority has blocked Microsoft’s acquisition of Activision Blizzard.

The UK Regulator has found that the merger would lessen the competition in cloud gaming. While this seems bad news for Microsoft, it says it will not go down without a fight. It will be appealing the decision soon.

The UK Regulator has now officially published its final report after months of investigation on the Microsoft x Activision Blizzard deal last week. The $69 billion deal was prevented by the regulator because they were concerned that it would “alter the future of the fast-growing cloud gaming market” which they thought would lead to reduced innovation and fewer choices for the UK gamers over the years to come.

This is a thorn in the side of Microsoft and the most significant yet since the UK Regulator is kind of a big deal. This entity is one of the influential in the group together with US and EU.

Here is a statement from the UK Regulator via press release:

“The CMA has prevented Microsoft’s proposed purchase of Activision over concerns the deal 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.

“Microsoft has a strong position in cloud gaming services and the evidence available to the CMA showed that Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own cloud gaming service.

“Microsoft already accounts for an estimated 60-70% of global cloud gaming services and 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 deal would reinforce Microsoft’s advantage in the market by giving it control over important gaming content such as Call of Duty, Overwatch, and World of Warcraft. The evidence available to the CMA indicates that, absent the merger, Activision would start providing games via cloud platforms in the foreseeable future.

“The cloud allows UK gamers to avoid buying expensive gaming consoles and PCs and gives them much more flexibility and choice as to how they play. Allowing Microsoft to take such a strong position in the cloud gaming market just as it begins to grow rapidly would risk undermining the innovation that is crucial to the development of these opportunities.”

Microsoft President Brad Smith also released a statement saying that the company was disappointed by the UK Regulator’s decision. It was also him that confirmed that it will appeal the decision.