Biggest-ever deal in gaming faces unexpected setback as UK watchdog drops concerns over console market but highlights Microsoft’s cloud streaming services as a growing concern
LONDON – Microsoft’s RM307.53 billion acquisition bid for video game publisher Activision Blizzard has been blocked by Britain’s antitrust regulator over concerns about competition in the cloud gaming market. This is the biggest-ever deal in gaming and the first time the UK watchdog has blocked a technology company’s acquisition. The surprise ruling comes after the regulator dropped its concerns about the impact of the deal on the console market led by Sony’s market-leading PlayStation.
The competition regulator’s primary concern now is the cloud streaming services market. Cloud gaming is growing fast, and Microsoft’s estimated 60%-70% of the global cloud gaming services, as well as competitive advantages that include owning Xbox, PC operating system Windows, and cloud provider Azure, have created worries about a lack of competition in the emerging market.
Microsoft’s offer to grant leading cloud gaming platforms access to Activision’s multi-billion dollar “Call of Duty” franchise did not alleviate the regulator’s concerns. The regulator said that cloud gaming will be worth RM61.06 billion globally by 2026. They highlighted the potential of cloud gaming to change the gaming landscape by altering how games are played, freeing people from relying on expensive consoles and gaming PCs, and giving them more choices over how and where they play games.
Cloud’s The Problem
Microsoft’s president Brad Smith said that the company remained fully committed to the acquisition and would appeal the decision. Activision said it would “work aggressively” with Microsoft to reverse the block.
The news has hit the global gaming industry hard, with Activision’s share price falling 10% in premarket US trading to RM347.65. The video game publisher is set to erase nearly RM31.20 billion in market valuation if the losses hold. Activision also makes other popular games, including “Candy Crush”, “Overwatch,” and “World of Warcraft.”
Europe will decide on the Activision deal by May 22. The US Federal Trade Commission is also seeking to block it.
This decision will not only affect the gaming industry but also global innovators. Activision has said that “despite all its rhetoric – the UK is clearly closed for business.” This is a setback for Microsoft’s gaming plans, and it remains to be seen how this decision will affect the company’s future strategy.
In conclusion, Microsoft’s acquisition bid for Activision Blizzard has been blocked by the UK antitrust regulator. The primary concern is that the acquisition would hinder competition in the cloud gaming market, an emerging and growing industry. Microsoft’s offer to grant access to Activision’s multi-billion dollar “Call of Duty” franchise to leading cloud gaming platforms did not alleviate the regulator’s concerns. This unexpected blow has impacted the global gaming industry, with Activision’s share price falling 10%. Microsoft remains committed to the acquisition and will appeal the decision, but the fallout from this decision is yet to be seen. – Variety