The UK Competition Authority (CMA) has blocked the acquisition of Activision Blizzard King, believing it would have a too negative impact on the rapidly growing cloud gaming market, potentially leading to less innovation and choice for players.
Microsoft’s attempt to acquire Call of Duty was not a concern for the CMA, but they had reservations about the future of cloud gaming, which ultimately led to the decision to block the deal. Microsoft will now appeal the decision and seek ways to approve the purchase of the company responsible for Diablo and Candy Crush.
CMA believes that Microsoft’s already strong position in cloud technologies would be further strengthened with exclusives from Activision Blizzard King, giving the Xbox owner significant financial incentives to release exclusives from the studios it wants to acquire. CMA notes that Microsoft owns 60-70% of cloud gaming services and has other strengths related to technology integration like Azure and Xbox.
Without the sale, CMA argues that Xbox would have strong incentives to create exclusives, while on the other hand, Activision Blizzard would be incentivized to start placing their games on various services, including cloud services.
As cloud services allow customers to play the latest releases without buying expensive equipment, be it consoles or PCs, Microsoft would significantly enhance its already privileged position in a growing sector. This leads CMA to believe there is a strong competition risk in a market that is still developing.
Microsoft expressed disappointment with the decision but is willing to engage with CMA to try to find ways to get the green light for the deal. Activision Blizzard argues that this decision harms consumers in the UK and emphasizes that they have consistently shown there are no incentives to make decisions that could harm the industry and players.
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