Microsoft’s Activision acquisition of Blizzard blocked by UK regulators

Microsoft’s $68.7 billion deal to buy Activision Blizzard has been blocked by the UK’s Competition and Markets Authority (CMA). After months of analyzing 3 million Microsoft and Activision documents and more than 2,100 emails from the public, The CMA has decided The deal will “change the future of the fast-growing cloud gaming market, leading to less innovation and less choice for UK gamers in the coming years.”

Microsoft says it will appeal the decision, but it’s a blow to Microsoft’s hopes of buying Activision Blizzard, and a failed appeal could prevent the company from closing its giant deal.

“Microsoft has a strong position in cloud gaming services and evidence available to the CMA suggests that Microsoft has found it commercially beneficial to make Activision’s games exclusive to its own cloud gaming service,” the CMA says.

The CMA estimates that Microsoft controls about 60 to 70 percent of global cloud gaming services and adds control. Call DuttY, OverwatchAnd World of Warcraft Microsoft will have a significant advantage in the cloud gaming market.

Microsoft tried to address concerns about cloud gaming before this decision. After striking a similar deal with Nintendo in December, software giant Boosteroid signed cloud gaming deals with Ubisoft and Nvidia to allow the competition to run Xbox PC games on cloud gaming services. These 10-year contracts also include access Call of duty and other Activision Blizzard games, if the deal is approved by regulators.

The CMA says it examined the contracts, but found they contained “several significant deficiencies” in cloud gaming services. The CMA says the contracts are “too narrow in scope” to require gamers to acquire the right to play games “by purchasing them at certain stores or by subscribing to certain services”. The agreements did not include Microsoft’s agreements to provide access to these games on rival multi-game subscription services, or competitors’ ability to “offer versions of the games on non-Windows PC operating systems.”

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The CMA also noted that these agreements would “standardise the terms and conditions on which games are available” instead of open competition in the cloud gaming market. “Without the tie-up, we have decided that Activision games will be available on cloud gaming services in the UK for the foreseeable future.”

The CMA initially sided with Microsoft Call of duty Last month, PlayStation worried that Microsoft’s withholding of the popular franchise from PlayStation would be costly. That left some cloud gaming concerns on the table, but the regulator says it considers whether the benefit of having Activision’s content on Game Pass outweighs concerns surrounding cloud gaming in the UK.

“We are grateful that Microsoft has engaged constructively with us to address these issues, but their proposals are not effective in addressing our concerns and would have replaced competition with inefficient regulation in a new and dynamic market,” said President Martin Coleman. An independent expert panel conducting the investigation.

“We are fully committed to this acquisition and will appeal,” said Microsoft Chairman Brad Smith. on the edge. “The CMA’s decision rejects a practical route to resolving competition concerns and discourages technology innovation and investment in the UK. We’ve already signed deals to make Activision Blizzard’s popular games available on 150 million more devices. After lengthy discussions, we are particularly disappointed that this decision appears to reflect a misunderstanding of how this market and related cloud technology actually works.

Activision Blizzard CEO Bobby Kodick said the company has already started working on an appeal. In an email For employees on Wednesday. “Along with Microsoft, we can fight this decision and we have already started work on an appeal to the UK Competition Appeals Tribunal,” says Kodick. “We are confident in our case because the facts are on our side: this deal is good for competition.”

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Microsoft’s appeal will push back the company’s plans to try to close the deal by the end of July. Microsoft had originally planned to close the deal by July 18, and is now forced to negotiate an extension of the merger agreement. If Microsoft’s CMA appeal fails or it fails to win approval from other regulators, it will have to pay Activision a $3 billion break-up fee.

Regulators in Saudi Arabia, Brazil, Chile, Serbia, Japan and South Africa have all approved the deal. The EU is expected to make a decision by May 22 Reuters Nvidia and Nintendo said last month that the deal is likely to be approved by EU regulators, following licensing deals.

Microsoft is also facing a regulatory probe by the Federal Trade Commission (FTC) in the US. The FTC sued Microsoft last year to block Activision’s purchase of Blizzard, and that investigation is still ongoing. A proof An inquest is scheduled When the documents are made public on August 2, there are indications that the lawsuit will reveal rare details about the game industry’s exclusive deals.

Updated, April 26 at 8:13AM ET: Article updated with more details on CMA’s cloud concerns.

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