The largest technology transaction in history was thwarted on Wednesday by British regulators, who were concerned that Microsoft’s $69 billion acquisition of video game developer Activision Blizzard would hinder competition in the rapidly expanding cloud gaming business.
“The only effective remedy” for the significant loss of competition, according to the Competition and Markets Authority’s final report, “is to prohibit the Merger.” The businesses have sworn to appeal.
Competitor Sony vigorously opposed the all-cash transaction, and regulators in the U.S. and Europe were keeping an eye on it out of concern that it would give Microsoft ownership over well-known game properties like Call of Duty, World of Warcraft, and Candy Crush.
Concerns raised by the U.K. watchdog concentrated on how the transaction might impact competition in cloud gaming, which involves streaming games to tablets, phones, and other devices. Players will no longer need to purchase pricey consoles and gaming laptops as a result.
According to Martin Colman, chair of the Competition and Markets Authority’s independent expert panel looking into the agreement, cloud gaming has the potential to transform the industry by offering players more flexibility over how and where they play.
In this new and fascinating sector, he continued, “It is critical that we protect competition.”
Microsoft expressed its disappointment while indicating it was not yet ready to give up.
The transaction still has our full support, and we will appeal, stated President Brad Smith in a statement. The watchdog’s judgment, according to him, “rejects a pragmatic path to address competition concerns” and deters tech investment and innovation in the UK.
Smith stated, “We’re particularly disappointed that, after careful consideration, this decision appears to reflect a flawed understanding of this market and the actual operation of the relevant cloud technology.”
Likewise, Activision retaliated, stating that it will “work aggressively with Microsoft to reverse this on appeal.”
Regulators withdrew their worries about the contract last month, stating that it wouldn’t be in Microsoft’s best interests to make Call of Duty an Xbox exclusive.
The agency said on Wednesday that it looked “in considerable depth” at Microsoft’s suggestions to allay competition worries, but that it concluded that those remedies would necessitate its supervision, whereas stopping the merger would allow cloud gaming to evolve naturally.
Regulators came to the conclusion that if the purchase went through, it would strengthen Microsoft’s advantage by giving it control of important game franchises, despite the fact that the business already holds a dominant position in the cloud computing sector.
