Microsoft and Activision Blizzard hit out as the UK disallow the takeover

picture courtesy: Reuters

Microsoft and Activision Blizzard have expressed their displeasure with the UK's Competition and Markets Authority (CMA) after it prevented Microsoft's acquisition of Activision Blizzard, a US video game company, valued at $68.7bn (£55bn). The deal would have allowed Microsoft to acquire hit titles such as Call of Duty and Candy Crush. However, the CMA raised concerns that the merger would stifle innovation and limit options for players in the rapidly expanding cloud gaming market. The companies have declared that they intend to appeal the decision and criticized the regulator for rejecting a practical approach to address competition concerns and discouraging technological innovation and investment in the UK.

Despite the Competition and Markets Authority's decision to block Microsoft's acquisition of Activision Blizzard, Brad Smith, the vice chairman and president of Microsoft, stated that the company remains dedicated to the purchase.

Smith expressed disappointment with the ruling, claiming that it denies an effective solution to address competition issues and discourages technological advancement and investment in the UK. He also noted that Microsoft had already inked agreements to offer Activision Blizzard's games on an additional 150 million devices. Smith further criticized the decision, stating that it appears to be based on a flawed comprehension of the market and the mechanics of the relevant cloud technology, despite lengthy discussions.

The conclusions drawn in the report are unfair to the citizens of the UK, who are facing increasingly challenging economic circumstances.

For the acquisition to proceed, it needs to receive clearance from regulatory bodies in the UK, US, and EU. The CMA is the first of these regulators to make a decision, and its verdict could jeopardize the entire acquisition. This makes the current ruling a significant aspect of the process. The CMA clarified that it had no concerns about the impact of the deal on competition in the console gaming market.

However, Martin Coleman, who headed an independent panel investigating the proposal for the regulator, stressed the importance of safeguarding competition in the emerging and thrilling market of cloud gaming. He noted that Microsoft already held a dominant position and a competitive edge in cloud gaming, and the acquisition would further strengthen its advantage, enabling it to suppress new and inventive rivals. Although Microsoft presented proposals to address the CMA's apprehensions, Coleman deemed them ineffective and warned that they would substitute competition with inadequate regulation.