Microsoft’s acquisition of Activision Blizzard has hit another roadblock.
The UK’s Competition and Markets Authority (CMA) has blocked Microsoft’s proposed $69 billion acquisition of the video game publisher, according to CNN.
The antitrust authority said in a statement that it feared that the deal would mean “reduced innovation and less choice for UK gamers over the years to come.”
“The deal would reinforce Microsoft’s advantage in the market by giving it control over important gaming content such as Call of Duty, Overwatch, and World of Warcraft,” the regulator said.
The CMA also noted the deal would strengthen Microsoft’s current 60-70% market share in global cloud gaming.
Microsoft and Activision plan to appeal the decision.
“The CMA’s report contradicts the ambitions of the UK to become an attractive country to build technology businesses. We will work aggressively with Microsoft to reverse this on appeal. The report’s conclusions are a disservice to UK citizens, who face increasingly dire economic prospects. We will reassess our growth plans for the UK. Global innovators large and small will take note that – despite all its rhetoric – the UK is clearly closed for business,” a spokesperson for Activision Blizzard told The Dallas Express.
“Alongside Microsoft, we can and will contest this decision, and we’ve already begun the work to appeal to the UK Competition Appeals Tribunal,” Activision Blizzard CEO Bobby Kotick said in a statement.
“We’re confident in our case because the facts are on our side: this deal is good for competition.”
“This decision appears to reflect a flawed understanding of the market and the way the relevant cloud technology actually works,” Microsoft President Brad Smith said, according to CNN.
Activision Blizzard’s stock price fell 11% on Wednesday, while Microsoft climbed 7%.
The deal, announced in January of 2022, has also been met with scrutiny by regulators in the U.S.
In December, the FTC authorized an administrative complaint against Microsoft, alleging that the company, which makes the gaming console Xbox, would gain control of top video game franchises, enabling it to limit competition by denying or degrading rivals access to its content.
“Microsoft has already shown that it can and will withhold content from its gaming rivals,” Holly Vedova, director of the FTC’s Bureau of Competition, said in a statement in December, referring to Microsoft’s decision to make certain gaming titles exclusive after acquiring ZeniMax despite having given assurances to European anti-trust authorities about doing such a thing.
“…[W]e seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets,” Vedova said.
An FTC hearing for the case is scheduled for August 2.
The European Union is also evaluating the deal. Reuters reported that it expected Microsoft to win EU antitrust approval in March, but the EU has since delayed its decision from April 25 to May 22, according to VGC.
“We have stood behind our promise to bring Call of Duty to more gamers on more devices by entering into agreements to bring the game to the Nintendo console and cloud game streaming services offered by Nvidia, Boosteroid, and Ubitus,” Microsoft said in a statement in March, according to Bloomberg.
“We are now backing up that promise with binding commitments to the European Commission, which will ensure that this deal benefits gamers into the future,” the statement continued.
Appearing on BBC radio on Wednesday, the different opinions held by EU and UK regulators led Microsoft’s President Smith to say, “There’s a clear message here – the European Union is a more attractive place to start a business than the United Kingdom.”
