The UK’s Competition and Markets Authority (CMA) announced in a final report published today that it has chosen to block the Activision Blizzard King x Microsoft merger.
While the group found that the merger would not have a material impact on competition among console services, it did conclude that it could reduce competition in the cloud gaming space. This appears to be the panacea for the approval process and the main reason why the CMA chose to block the deal.
The final statement states: “In terms of cloud gaming services, we find that Microsoft has established a strong position. It has a popular gaming platform (Xbox and a large game portfolio), a leading PC operating system (Windows) and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming), giving it an important advantage in running cloud gaming services. It is estimated to have a 60-70% market share in global cloud gaming services, already far ahead of its competitors.
It continued: “We find that a merger would make Microsoft stronger and significantly reduce competition in this market. We find that Activision’s games — including CoD, World of Warcraft, and Overwatch — are critical to delivering competitive cloud gaming. Services are important because the market continues to grow and evolve. We find that after the merger, Microsoft will find it commercially beneficial to keep Activision’s games dedicated to its own cloud gaming service. Given its already strong position, even modest Increasing Microsoft’s power can also be expected to substantially reduce competition in this developing market, harming current and future cloud gaming users.”
While Microsoft has proposed a remedy to these concerns in the form of Microsoft Cloud Remedy, the CMA identified several shortcomings that lead them to worry that competition in cloud gaming will be significantly reduced.
Following the announcement, Microsoft Vice Chairman and CEO Brad Smith statement on twitter
ok, what does this mean? As Smith said, there may be an appeal against this decision, but it’s another major hurdle in the way of a giant merger between Microsoft and ABK. We will also see the final decision from the European Commission, which postponed its decision until May 22.As Britain leans into the “valley of death” of their future, in the words of Bobby Koticks, all eyes are on the European British Isles as deals fall through
How do you feel about this decision? Let us know below.
