On Wednesday, British antitrust regulators blocked Microsoft ‘s $69 billion acquisition of video game maker Activision Blizzard.
This move thwarts what would have been the biggest tech deal in history.
The regulators expressed concerns that the acquisition could stifle competition in the fast-growing cloud gaming market, particularly for popular titles such as Call of Duty.
In its final report, the Competition and Markets Authority stated that the substantial loss of competition could only be remedied by prohibiting the merger. However, Microsoft and Activision Blizzard have announced their intention to appeal this decision.
Rival company Sony, which produces the PlayStation gaming system, strongly opposed the all-cash deal when it was announced 15 months ago. Regulators in both the U.S. and Europe were also scrutinizing the proposed acquisition due to concerns that it would grant Microsoft and its Xbox console control over popular franchises like Call of Duty and World of Warcraft.
Surprise To Most People
The U.K. watchdog’s decision “came as a surprise to most people” and heightens global uncertainty over the deal, said Liam Deane, a game industry analyst for research firm Omdia.
According to him, the market is significant enough to cause significant disruption from the perspective of Microsoft and Activision. However, the situation could worsen if they receive an unfavorable decision from the European Commission in a few weeks.
The U.K. watchdog’s concerns centered on how the deal would affect cloud gaming, which streams to tablets, phones and other devices and frees players from buying expensive consoles and gaming computers. Gamers can keep playing major Activision titles, including mobile games like Candy Crush, on the platforms they typically use.
Cloud gaming has the potential to change the industry by giving people more choice over how and where they play, said Martin Colman, chair of the Competition and Markets Authority’s independent expert panel investigating the deal.
“This means that it is vital that we protect competition in this emerging and exciting market,” he said.
The decision underscores Europe’s reputation as the global leader in efforts to rein in the power of Big Tech companies. A day earlier, the U.K. government unveiled draft legislation that would give regulators more power to protect consumers from online scams and fake reviews and boost digital competition.