The U.K. Competition and Markets Authority (CMA) decided to block Microsoft’s acquisition of Activision Blizzard. The regulator expressed concern that the purchase would result in less innovation and less competition for players in the rapidly rising cloud gaming industry.
“Allowing Microsoft to take such a strong position in the cloud gaming market at a time when it is rapidly expanding risks undermining the innovation that is critical to the development of these opportunities,” the CMA stated in a news release Wednesday.
However, Microsoft said it wants to appeal the decision. Microsoft Vice Chair and President Brad Smith said that Microsoft will stay “fully committed to this acquisition and will appeal.”
“The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom,” he added.
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“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.” “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.”
“The CMA’s report contradicts the UK’s ambitions to become an attractive country to build technology businesses,” an Activision representative stated. “We will work aggressively with Microsoft to reverse this on appeal.”
In order for the acquisition to go through, regulatory bodies in the UK, United States, and European Union have to approve the deals. The CMA is the first of the three regulators to rule, which means that its judgment might derail the entire takeover. Meanwhile, the merger is still under investigation by the EU to determine if it has a negative impact on competition, and the U.S. Federal Trade Commission has filed a lawsuit to prevent the merger based on antitrust concerns.
