Microsoft Acquisition of Activision Blizzard Blocked by UK Regulator

One of the most significant and expensive corporate mergers in history just hit a snag, as the UK’s competition authority blocked Microsoft’s proposed purchase of Activision Blizzard. The deal is worth around $69 billion and will see Microsoft take full control of the highly successful games developer.

That’s a No From Us

While the governments of Brazil, Japan, and South Africa have all cleared the intended merger, the U.K.’s Competition and Markets Authority released its final report on April 26, 2023, effectively blocking the deal from happening in the region. The European Union still has to release its findings, but it’s widely believed to back the acquisition.

In the summary documentation, the CMA explains that while the merger won’t result in a substantial lessening of competition in the U.K.’s console gaming services, it could affect the service level of cloud gaming in the U.K.

“We found that Microsoft already has a strong position … (and) that the Merger would make Microsoft even stronger and substantially reduce competition in this market. We found that Activision’s titles – including CoD, World of Warcraft, and Overwatch – will be important for the competitive offering of cloud gaming services as the market continues to grow and develop,” it says in the report.

Where to From Here?

As with most mergers or acquisitions, it can become a protracted process. Microsoft is expected to appeal the CMA decision. It’s unclear if Microsoft can alter the condition of the merger specifically for the U.K. market. However, the CMA did indicate that there are “potential benefits of the merger.”

Microsoft’s Vice Chair and President Brad Smith tweeted that the company “remains fully committed” and that the company would appeal.

“We remain fully committed to this acquisition and will appeal. The MA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom. We have already signed contracts to make Activision Blizzard’s popular games available on 150 million more devices, and we remain committed to reinforcing these agreements through regulatory remedies,” he wrote.

“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.”

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