Microsoft, one of the biggest tech giants, announced in January last year that it would acquire Activision Blizzard for $69 billion.
Activision Blizzard is the holding company that owns one of the most popular game publishers, Activision, which is the creator of top games like Call of Duty, Candy Crush, World of Warcraft, Diablo, StarCraft and Overwatch.
The acquisition - if succeeded, will be the biggest takeover of one company by another in gaming history - is opposed by many governments as they believe that the purchase of Activision will give Microsoft too much power over the gaming industry.
The American, UK and Canadian governments have expressed concerns over this deal. Activision is known for making one of the best games played by millions of people, and the company earns billions through in-game purchases. If Microsoft purchases Activision, it can make the future Activision games exclusive to Xbox, which can significantly hurt the market of its competitor Sony.
Citing these issues, the UK’s Competition and Market Authority (CMA) has blocked the deal in the UK. CMA said it was concerned that the acquisition would offer reduced innovation and fewer choices for gamers in the fast-growing cloud gaming business.
Microsoft and Activision hit out at the decision and said they would appeal.
“The CMA’s report contradicts the ambitions of the UK to become an attractive country to build technology businesses,” a spokesperson for Activision said.
CMA replied, “We will work aggressively with Microsoft to reverse this on appeal.”
Brad Smith, vice chairman and president of Microsoft, said, “The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom.”
The company was still committed to the acquisition, he added.
Microsoft needs approval from regulatory bodies in the United States, European Union and UK to complete the deal. CMA is the first to block the deal, and its decision can impact the decision of other regulatory bodies in the US and European Union.
The UK body said it was not concerned that the deal would distort competition in the console gaming market. The UK is concerned for its people as the country is going through economic instability. It fears that Microsoft could raise the prices of popular titles.
Activision Blizzard is based in the US, but it has subsidiaries in Europe and the UK, so Microsoft needs the approval of the regulatory body of the United States along with the bodies in Europe and the UK to complete the acquisition. Microsoft needs the deal to be approved by the regulatory bodies of either the UK or European Union to make its case in the US, where both companies are headquartered.
Microsoft has been investing heavily in cloud gaming - seeing its potential in the future - recently. Microsoft sells the subscription service Game Pass which allows players to play the games hosted on servers elsewhere. The players do not need to buy the game as they can stream any game with a monthly subscription, just like Netflix.
Microsoft needs a vast catalogue of games for its subscribers. Unfortunately, it does not make high-quality popular games like its rival Sony which is the creator of popular titles like God of War, The Last of Us, Ghost of Tsushima and many more. So, Microsoft needs a game studio that can make these high-quality titles, and one of the best in the market is Activision which Microsoft had been planning to acquire for a long time.
Microsoft’s rival Sony is expressing concerns that in the future, Microsoft will not allow the popular Activision games on Sony’s PlayStation.
Microsoft also owns Mojang, the creator of Minecraft, GitHub, Nuance, Skype and LinkedIn.
Written by Mayank Vikash
Published on Sunday, 30th April 2023 at 5:45 IST
Last updated Sunday, Apr 30, 2023, at 5:49 IST