UK government blocked Microsoft’s purchase of Activision
In January 2022, Microsoft announced an agreement to buy Activision Blizzard King for more than 68 billion dollars. Now, more than a year after the announcement, this purchase that would allow Xbox to keep some of the most important franchises in the world of video games has been blocked by the United Kingdom government, which expressed serious doubts about the future of the game in the cloud if it allowed Microsoft to take over Activision.
This came as quite a surprise, as many assumed that the CMA (Competition and Markets Authority) regulators would have a positive position on the acquisition.
In a statement issued in the early hours of Wednesday, April 26, this UK government entity expressed its opposition to Microsoft/Xbox’s purchase of Activision Blizzard King, alleging that it could “disrupt the future of the growing cloud gaming market, reducing innovation and choice for UK gamers for years to come”.
They added that “Microsoft would find commercial benefits by making Activision games exclusive to its xCloud cloud service for Xbox.” Microsoft currently controls between 60% and 70% of this type of services through Azure and xCloud.
The reaction of Microsoft and Activision to the announcement of the blocking of the purchase
Brad Smith, president of Microsoft, said that is disappointed by the CMA decision and announced that he will appeal it. He said this block “reflects a misunderstanding of the market and the way cloud technology works.”
Bobby Kotick, the controversial and heavily criticized CEO of Activision Blizzard King, said that “this is not the last word on the purchase”.
It should be said that many expected that this purchase would drive the departure of Kotick from the company, whom many blame for tolerating the environment of labor abuse and sexual harassment that exists in it. Others say that he himself is a stalker and abuser.
The decision of the United States and the European Union
The other two organizations that can most influence the authorization of this purchase are the FTC of the United States and the European Commission of the EU. The FTC opposes the purchase and even sued it in an attempt to block it.. For its part, the EU continues to investigate and would publish its decision on May 22.
Microsoft has recently reached agreements with Nintendo and GeForce to publish their games on other platforms in an attempt to calm the concerns of the European Union in this regard.
A controversial decision
Some may celebrate the blocking of the CMA as an antitrust victory. Others lament that if Microsoft/Xbox does not buy Activision Blizzard, workplace and sexual harassment cases would continue at the company, while some believe that This is a victory for Sony, whose lawyers have worked hard to convince regulators to block the purchase.
However, it is not the end. Microsoft has already said that it will appeal the decision and we will have to wait and see what results from this. If the CMA changes its mind and the EU gives the go-ahead for the acquisition, the purchase could still come to fruition, but it is becoming less likely this year.
Source: Official statement from the UK government