Microsoft’s $68.7 billion Activision deal blocked in Britain

The Competition and Markets Authority (CMA) has blocked Microsoft’s proposed acquisition of video games giant Activision, over concerns the deal would hinder innovation and reduce choice. Microsoft says it will appeal the decision that could derail its largest deal ever.

The CMA said that Microsoft failed to “effectively” address its concerns regarding competition in a rapidly-growing cloud gaming market that it already dominates. Microsoft accounts for an estimated 60-70% of global cloud gaming services, according to the antitrust regulators.

The proposed takeover would reinforce Microsoft’s position to the detriment of gamers “for years to come,” the regulators said. The company would become the owner of titles like Call of Duty, Overwatch, and World of Warcraft.

Martin Coleman, who chaired an independent panel investigating the proposal for the CMA, said it was “vital” to protect the emerging cloud gaming market by ensuring “current competitive dynamics.”

“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,” Coleman said.

While Microsoft “engaged constructively” to address these issues, its proposals “were not effective to remedy our concerns and would have replaced competition with ineffective regulation in a new and dynamic market,” he added.

Microsoft said it remained “fully committed” to the acquisition and would appeal the antitrust body’s decision, which is also facing pushback in the US and the EU.

“The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the UK,” Brad Smith, Microsoft president, said in a statement shared with Cybernews.

Microsoft had already signed contracts to make Activision’s popular video games available on 150 million more devices, he said, and “we remain committed to reinforcing these agreements through regulatory bodies.”

“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,” Smith said.

The decision by British regulators is a significant setback for Microsoft and could derail its plans to acquire the California-based video games publisher.

If the $68.7 billion deal to acquire Activision goes through, it will become the largest video game industry acquisition in history, as well as Microsoft’s most expensive purchase to date.