Following the European Commission’s (EC) approval of Microsoft’s acquisition of Activision Blizzard, the UK’s Competition and Markets Authority (CMA) has taken to Twitter to clarify its own position on the deal.
Our response to the European Commission’s announcement today on Microsoft/Activision ⬇
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— Competition & Markets Authority (@CMAgovUK) May 15, 2023
The CMA’s decision to block the deal came due to its concerns regarding how the acquisition would affect competition in the cloud gaming industry – a sector where Microsoft already has a significant advantage. These tweets highlight the fact that both the UK CMA and EC are agreed in having concerns.
However the EC hasn’t found them problematic enough to halt the deal, unlike the UK CMA. The rapid response following the news from the European Commission suggests that the CMA knew which way the EC were going to turn.
Sweetening the deal
While Microsoft attempted to address concerns regarding the space – including suggested remedies such as issuing free licences to cloud gaming providers – the CMA concluded that these concessions didn’t go far enough to ensure healthy competition, and in fact would help Microsoft enhance its grip on the sector.
“The UK, US and European competition authorities are unanimous that this merger would harm competition in cloud gaming,” wrote the group. “The CMA concluded that cloud gaming needs to continue as a free, competitive market to drive innovation and choice in this rapidly evolving sector.”
“Microsoft’s proposals, accepted by the European Commission today, would allow Microsoft to set the terms and conditions for this market for the next 10 years.”
What does this mean for the deal?
While the EU’s approval of the acquisition is likely to come as a breath of fresh air for Microsoft and Activision Blizzard, both of whom remain committed to the deal, the CMA’s continued concerns may cause some worries. Activision Blizzard told shareholders in March that the deal could be scuppered due to “any action has been taken by any governmental authority of competent jurisdiction, that … prohibits, makes illegal or enjoins the consummation of the merger and has become final and non-appealable.”
Should Microsoft’s ongoing appeal against the decision prove fruitless, they may therefore be forced to step away from the table rather than lose access to such a lucrative market – and while some have argued that the EU’s decision could offer useful precedent for Microsoft in the case, it appears that the CMA is firm in its opinion that the deal could prove bad for business.
We listed Activision Blizzard as one of the top 50 mobile game makers of 2022.