An Activision Blizzard’s Call of Duty: Modern Warfare video game is inserted into the Microsoft’s Xbox One video game console arranged in Denver, Colorado, on Wednesday, Jan. 19, 2022.
Michael Ciaglo | Bloomberg | Getty Images
LONDON — Britain’s top competition regulator on Wednesday moved to block Microsoft‘s acquisition of video game publisher Activision Blizzard.
The measure marks a major blow for the U.S. tech giant, as it seeks to convince authorities that the deal will benefit competition.
Microsoft said it plans to appeal the decision.
The U.K. Competition and Markets Authority said that it opposed the deal as it raises competition concerns in the nascent cloud gaming market.
Microsoft could make Activision’s games exclusive to its cloud gaming platform, Xbox Game Pass, cuting off distribution to other key players in the space, the CMA said.
Cloud gaming is a technology that enables gamers to access games via companies’ remote servers — effectively streaming a game like you would a movie on Netflix. The technology is still in its infancy, but Microsoft is betting big on it becoming a mainstream way of playing games.
Microsoft announced its intention to acquire Activision Blizzard in January 2022 for $69 billion, in one of the biggest deals the video game industry has seen to date.
Executives at the Redmond, Washington-based technology giant believe the acquisition will boost its efforts in gaming by adding lucrative franchises like Call of Duty and Candy Crush Saga to its content offerings.
However, some of Microsoft’s competitors contested the deal, concerned it may give Microsoft a tight grip on the $200 billion games market. Of particular concern was the prospect that Microsoft may shut off distribution access to Activision’s popular Call of Duty franchise for certain platforms.
Sony, in particular, has voiced concern with Microsoft’s Activision purchase. The Japanese gaming giant fears that Microsoft could make Call of Duty exclusive to its Xbox consoles in the long run.
Microsoft sought to allay those concerns by offering Sony, Nintendo, Nvidia and other firms 10-year agreements to continue bringing Call of Duty to their respective gaming platforms.
Microsoft argues it wouldn’t be financially beneficial to withhold Call of Duty from PlayStation, Nintendo and other rivals given the licensing income it generates from keeping the game available on their platforms.
Microsoft President Brad Smith told CNBC last month that the company is offering Sony the same agreement as it did Nintendo — to make Call of Duty available on PlayStation at the same time as on Xbox, with the same features. Sony still opposes the deal.
The CMA had raised concerns with the potential for Microsoft to hinder competition in the nascent cloud gaming market via its Xbox Game Pass subscription service, which offers cloud gaming among its perks. Microsoft has committed to bring new Call of Duty titles to Xbox Game Pass on day one of its release.
Cloud gaming, or the ability to access games via PC or mobile devices over the internet, is still in its infancy and requires a strong broadband connection to work well. According to network intelligence firm Sandvine, cloud gaming made up less than 1% of global internet traffic in 2022.
Even with the CMA’s blessing, Microsoft will still need to convince other regulators not to block the deal. The EU continues to probe the merger to assess whether it hurts competition, while the U.S. Federal Trade Commission sued to block the deal on antitrust grounds.
This is a breaking news story and will be updated shortly.
Source: https://www.cnbc.com/2023/04/26/britain-blocks-microsoft-acquisition-of-activision-blizzard.html