Microsoft’s staggering $69 billion bid to acquire Activision Blizzard, the creator of “Call of Duty,” encountered an unforeseen obstacle on Wednesday. The UK announced its intention to obstruct the takeover due to apprehensions about the potential negative impact on competition within the cloud gaming industry.
The United Kingdom’s antitrust regulator expressed concerns on Wednesday about the largest-ever deal in gaming history. The regulator stated that Microsoft’s promise to provide access to Activision’s highly lucrative “Call of Duty” series for prominent cloud gaming platforms would not adequately address the competition concerns raised.
About Activision Blizzard
Activision Blizzard, Inc. creates and distributes interactive entertainment content and services. It develops and distributes content and services for video gaming consoles, PCs, and mobile platforms. It organizes e-sports leagues and incorporates digital advertising into some of its programs.
Activision is known for games such as Call of Duty, World of Warcraft, Diablo, and Overwatch.
”As the leading worldwide developer, publisher and distributor of interactive entertainment and products on consoles, mobile and PC, our “press start” is simple: delight players around the world with innovative, fun, thrilling, and engaging entertainment experiences.”activision.com
The Acquisition of Activision Could Harm Consumers
Critics contend that Microsoft’s acquisition of Activision Blizzard would lead to an excessive concentration of power in the gaming industry, unfairly restricting competition and ultimately harming consumers. Both the US Federal Trade Commission (FTC) and the UK’s Competition and Markets Authority (CMA) have expressed concerns about the deal.
The FTC voted three to one to issue a complaint against the buyout, while the CMA concluded that the acquisition would likely lead to increased prices, reduced choices, and diminished innovation for gamers in the UK.
“Cloud gaming is growing fast with the potential to change gaming…freeing people from the need to rely on expensive consoles and gaming PCs and giving them more choice over how and where they play games.”CMA Panel Chair Martin Coleman.
The CMA also stated that Microsoft possessed an estimated 60%-70% of worldwide cloud gaming services, as well as competitive advantages such as ownership of Xbox, PC operating system Windows, and cloud provider Azure.
In response to the concerns raised, Microsoft’s president Brad Smith expressed the company’s unwavering commitment to the acquisition in a statement. He said that Microsoft would appeal the decision and work closely with Activision to overturn it. Activision also announced its intention to “work aggressively” alongside Microsoft to reverse the decision that impedes the deal’s progress.
Brad Smith further elaborated on his disagreement with the regulatory authorities, stating that the decision seemed to stem from a faulty understanding of the market dynamics and the actual functioning of the relevant cloud technology. He implies that the regulators may not have accurately assessed the implications of the acquisition on the industry.
In conclusion, the future of Microsoft’s acquisition of Activision Blizzard is uncertain, as regulatory authorities in both the United States and the United Kingdom express worry about the deal’s possible influence on the gaming sector. However, Microsoft and Activision remain committed to the acquisition and want to collaborate to address and overcome these concerns.