In a shocking development, the United Kingdom has blocked the proposed acquisition of Activision by Microsoft, citing concerns over the impact on the video game industry and the potential for anti-competitive behavior. This has come as a blow to Microsoft, which had been hoping to acquire Activision in a deal worth $68.7 billion as part of its plans to expand its Game Pass subscription service.
Game Pass is a subscription service that offers users access to a wide range of video games for a monthly fee. The service has proven to be incredibly popular, with millions of users signing up for the service since its launch. Microsoft had been hoping to bolster its Game Pass offerings by acquiring Activision, which owns popular franchises like Call of Duty, World of Warcraft, and Candy Crush.
CMA’s decision on the acquisition
The UK Competition and Markets Authority (CMA) has, however, halted these measures due to worries about the effects they might have on the video gaming sector. The CMA is in charge of ensuring that businesses do not engage in anti-competitive behavior that hurts consumers or stifles innovation. Simply put, the regulatory body is the UK’s competition watchdog.
In a statement, the CMA said that the proposed acquisition of Activision by Microsoft “could result in a substantial lessening of competition” in the video game industry. It went on to say that it had “particular concerns” over the impact on Game Pass, which it said could become a “must-have” service for gamers if Microsoft were to acquire Activision.
Industry professionals have praised the CMA’s decision and cautioned that the purchase may have negative effects on the video gaming sector. According to some business analysts who spoke to the media, the acquisition would give Microsoft unmatched power in the video game market and would result in higher pricing for customers and fewer options.
Microsoft has expressed its disappointment with the CMA’s decision, saying that it believes the acquisition would have been good for gamers and the industry as a whole. The company has not yet announced whether it plans to appeal the decision or pursue other avenues to acquire Activision.
Activision Blizzard CEO Bobby Kotick said in a statement,
Alongside Microsoft, we can and will contest this decision, and we’ve already begun the work to appeal to the UK Competition Appeals Tribunal.
Microsoft President Brad Smith added,
This decision appears to reflect a flawed understanding of the market and the way the relevant cloud technology actually works.
For now, the future of Game Pass and Microsoft’s plans for the video game industry remains uncertain. With the UK’s decision to block the deal, it seems that Microsoft will have to look elsewhere for ways to expand its offerings and stay competitive in the rapidly-evolving video game market.