UK's CMA blocks Activision Blizzard acquisition from Microsoft

Microsoft's high-profile acquisition of Activision Blizzard for around $69 billion is hitting a major hurdle on its way to completion, as the UK's Competition and Markets Authority (CMA) is not giving its approval because it believes it could harm competition in the cloud gaming market.

The CMA's press release highlights that Microsoft currently controls around 60-70% of the global cloud gaming market, with a particular emphasis on the fact that the company owns not only the Xbox and the most popular computer operating system (Windows OS), but also the cloud infrastructure with Azure and Xbox Cloud Gaming.

The deal would significantly strengthen Microsoft's market advantage, giving it control over very important gaming content such as Call of Duty, Overwatch and World of Warcraft. The evidence in CMA's hands suggests that even without the acquisition being completed, Activision will still proceed to launch its games on cloud platforms in the near future.

The cloud gives UK gamers the ability to avoid costly purchases of game consoles and computers and gives them much greater flexibility and choice in the way they play. Allowing Microsoft to further strengthen its position in the rapidly growing cloud gaming market could lead to a degradation of innovation.

The CMA admits that Microsoft has made efforts to rectify the situation, but has failed to meet the requirements in certain areas:

• Not covering different cloud gaming models, including subscription services that feature many games
• It is not clearly open to the possibility that game publishers may wish to launch their titles on operating systems other than Windows OS.
• It could set the terms and conditions of availability of games on its own, contrary to the rules of the open market.

Microsoft and Activision Blizzard's initial reaction to the CMA's decision was indicative of their frustration at the regulator's lack of understanding of the market. Both have stressed that they will appeal and that they will continue to take every possible action to complete their deal as planned.