The UK’s CMA (Competition & Markets Authority) has issued a major fresh crackdown barring Microsoft and Activision-Blizzard from investing or “aquiring an interest” in one another.
The latest move comes after the CMA blocked the Activision-Blizzard deal at the end of last month, citing concerns around the potential monopoly on cloud gaming they claimed this would offer Microsoft. Enforcing the block yet further, this latest ‘interim order’ seeks to prevent even investment between the two companies, another major barrier sure to attract controversy and curiosity in equal measure as it represents another big strain on what is quickly becoming a battle of titanic proportions for Microsoft.
The deal, as we’ve previously stated, is focused primarily on the acquisition of mobile mega-hit maker King. With the majority of properties on console and PC seen as possibly more of a fringe benefit, compared to the dominance in a new market that Microsoft has struggled to break into.
For critics and proponents alike however, the focus has been on the traditionally “big” aspects such as console-exclusivity and in the CMA’s case, game streaming. This latest set of measures represents a far greater and more complex legal challenge for Activision Blizzard. With this new block in place it wouldn’t even be possible to invest in King (rather than buy them outright, which has already seen a block by the CMA).
Effectively the CMA are out to block every possible avenue, no matter how sneaky or small, for the two giants to financially benefit from each other.
The CMA’s definition of interest as “any interest conferring control within the meaning of section 26 of the Act which includes the ability, directly or indirectly, de jure or de facto, to control or materially influence the policy of a body corporate, or the policy of any person in carrying on an Enterprise but without having a controlling interest in that body corporate or that Enterprise,” leaves little wiggle room for Microsoft or Activision-Blizzard to share any kind of shared interest.
Bold moves, big outcry
The CMA’s move represents a major hurdle to Activision-Blizzard and Microsoft, even as they vowed to fight the initial move. It represents possibly the strongest legal opposition yet, save perhaps legal action launched by the American FTC. Aside from the obvious implications for proponents and opponents of the deal alike, it also represents a major conundrum for those in the British game industry.
President of Microsoft, Brad Smith, issued a stark warning in his initial comments during the first moves by the CMA, “Unfortunately I think it’s bad for Britain…the strong message the CMA has sent is not just to surprise everyone who fully expected this acquisition to be approved, but to send a message that I think will discourage innovation and investment in the United Kingdom.
“There’s a clear message here, the European Union is a more attractive place to start a business if you want some day to sell it, than the United Kingdom.”
The European commission is set to make its own ruling on May 20 on their decision regarding the deal. If Europe opposes it, in conjunction with the UK, then the deal may not be worth pursing elsewhere and the biggest aquisition in video games history could be dead in the water.
We await their verdict (and Microsoft’s reaction to the UK CMA’s latest moves) with interest.