Microsoft’s proposed acquisition of Activision Blizzard for $69 billion (roughly Rs.5,64,000 crore) will be blocked by Britain due to concerns about competition in cloud gaming. This unexpected setback is a blow to the gaming industry’s largest-ever deal.
The country’s antitrust regulator announced on Wednesday that Microsoft’s offer to provide access to Activision’s highly profitable Call of Duty franchise on leading cloud gaming platforms was insufficient to address its concerns.
In response to the decision, Microsoft stated that it remains fully committed to the acquisition and will appeal the ruling. Activision similarly expressed its intention to work aggressively with Microsoft to reverse the decision, while also stating that it will reassess its growth plans for the UK. Activision criticized the UK for being closed for business, which could have implications for future global innovators.
As a result of this announcement, Activision’s shares dropped more than 10 percent in U.S. pre-market trade.
This unexpected ruling comes after the Competition and Markets Authority (CMA) previously withdrew its concerns regarding the impact of the acquisition on the console market, specifically Sony’s PlayStation which leads the market.
The remaining obstacle was in the area of cloud streaming services, which Microsoft attempted to address by entering into licensing agreements with streaming platform owners like Valve, Nvidia, and Boosteroid.
Microsoft had already offered Sony, who has been vocal in opposition to the deal, a 10-year Call of Duty license. This offer was consistent with Microsoft’s agreement to bring the multi-billion dollar franchise to Nintendo’s Switch.
The deal will be evaluated by European regulators by May 22, and the United States Federal Trade Commission is seeking to block it as well.
© Thomson Reuters 2023
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