Microsoft’s R1.3-trillion Activision Blizzard deal blocked by UK

3 years ago 3

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Microsoft Corp.’s $69 billion (R1.3 trillion) takeover of Activision Blizzard Inc. suffered a hammer blow after Britain’s antitrust watchdog vetoed the gaming industry’s biggest-ever deal, saying it would harm competition in cloud gaming.

The Competition and Markets Authority said its concerns couldn’t be solved by remedies such as the sale of blockbuster title Call of Duty or so-called behavioural remedies involving promises to permit rivals to offer the game on their platforms, according to a statement Wednesday.

Pressure had been mounting on Microsoft as it lobbies at home and in Europe to convince watchdogs to clear the deal — one of the 30 biggest acquisitions of all time.

Crucially, the CMA’s conclusions comes before decisions from the European Union and the US Federal Trade Commission, which is awaiting a hearing in the summer after formally suing to veto the transaction.

“Microsoft already enjoys a powerful position and head start over other competitors in cloud gaming and this deal would strengthen that advantage giving it the ability to undermine new and innovative competitors,” Martin Coleman, chair of the independent panel of experts conducting this investigation, said.

The CMA took a view that the merger could result in higher prices, fewer choices and less innovation for UK gamers.

However, earlier this month it narrowed its original scope to focus on cloud gaming rather than consoles, after weighing new evidence.

“We remain fully committed to this acquisition and will appeal,” Brad Smith, vice chair and president of Microsoft, said.

“The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the UK.”

The CMA said the deal would solidify Microsoft’s advantage in the market by giving it control over blockbuster games Call of Duty, Overwatch, and World of Warcraft.

The watchdog found that without the merger Activision would be able to start providing games on cloud platforms in the future.

“The CMA’s report contradicts the ambitions of the UK to become an attractive country to build technology businesses,” an Activision spokesperson said.

“We will work aggressively with Microsoft to reverse this on appeal.”