UK blocks Microsoft’s planned $68.7B Activision bid, saying it would ‘substantially weaken competition’

The U.K.’s Competition and Markets Authority (CMA) has confirmed that it intends to block Microsoft’s megabucks Activision acquisition, concluding that such a merger would create “…the most powerful
operator” in the cloud gaming market.

The CMA noted that with a current share of 60-70%, acquiring Activision’s portfolio of games would “substantially weaken competition” in the market. It added that Microsoft would also have the incentive to withhold such games from competing gaming platforms.

The story so far

By way of a brief recap, Microsoft first revealed plans to buy Activision in a whopping $68.7 billion deal last January, a move that would essentially make Microsoft the third-largest gaming company in the world by revenue behind Tencent and Sony, while giving it direct control over mega-franchises such as Call of Duty and World of Warcraft.

Last July, the CMA confirmed it was launching an antitrust investigation into the deal, then two months ago the regulator gave the strongest indication yet that it was gearing up to block the merger when it provisionally concluded it “could harm U.K. gamers” by creating higher prices, fewer choices, and less innovation. Then last month, the CMA narrowed its position to focus entirely on cloud gaming, rather than console gaming.

It wrote at the time:

The CMA has received a significant amount of new evidence in response to its original provisional findings. Having considered this new evidence carefully, together with the wide range of information gathered before those provisional findings were issued, the CMA inquiry group has updated its provisional findings and reached the provisional conclusion that, overall, the transaction will not result in a substantial lessening of competition in relation to console gaming in the UK.

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