Microsoft’s proposed US$69 billion acquisition of Activision Blizzard is in jeopardy after the UK’s competition regulator delivered, to put it in gamer parlance, a 360 no-scope kill shot.
What happened: The Competition and Markets Authority (CMA) has blocked the largest gaming deal ever on the grounds that it would lead to reduced competition and stifled innovation in the emerging cloud gaming space—ultimately hurting UK gamers.
- The CMA found that owning Activision’s popular franchises like Overwatch, World of Warcraft, and, in particular, Call of Duty, would make Microsoft far too strong.
Microsoft tried to appease market dominance concerns by signing licensing deals with competitors, but the CMA thought the strategy contained “significant shortcomings.”
- The merger also faces potential blocks by The European Commission and the US Federal Trade Commission, set to make decisions in May and August, respectively.
Why it matters: Given the global, interconnected scope of the video game industry, the decision could spell the deal’s end, legal experts told The WSJ. Even if the deal isn’t blocked in the EU or US, it wouldn’t be practical for the company to carry on without UK approval.
- It wouldn’t be the first time the CMA killed a tech deal, like last year, when Meta sold Giphy because, even though its purchase was completed, the CMA still deemed it non-competitive.
Zoom out: Competition regulators are baring their teeth against Big Tech. From the FTC’s new approach of stopping potential monopolies early to the EU’s full-on blitzkrieg against tech giants, big money mergers could be tougher to move through in this new environment.—QH