The United Kingdom’s Competition and Markets Authority (CMA) has put a stop to Microsoft’s proposed acquisition of Activision, a major video game publisher. The decision aims to protect innovation and consumer choice in the rapidly growing cloud gaming market. Let’s dive into what this means for gamers and the future of cloud gaming.

Background:

In January 2022, Microsoft announced plans to acquire Activision in a $68.7 billion deal. Activision is the publisher behind popular games like Call of Duty, Overwatch, and World of Warcraft. Microsoft, already a dominant player in the cloud gaming market, hoped to strengthen its position by adding Activision’s impressive game library to its services.

Why the CMA Blocked the Deal:

The CMA launched a thorough review of the acquisition in September 2022, eventually concluding that the deal could stifle competition in the expanding cloud gaming market. With Microsoft already accounting for an estimated 60-70% of global cloud gaming services, the CMA feared that acquiring Activision would grant Microsoft even more control over gaming content, ultimately reducing innovation and limiting choices for UK gamers.

Microsoft’s Proposal and Its Shortcomings:
To address the CMA’s concerns, Microsoft submitted a proposal that outlined requirements for game offerings, platforms, and conditions over a ten-year period. Unfortunately, the proposal had several significant issues, such as not adequately covering different cloud gaming service business models and limiting openness to providers who might want to offer versions of games on PC operating systems other than Windows.

The CMA’s Decision and the Importance of Competition:

After carefully considering Microsoft’s proposal, the CMA decided that the benefits of having Activision’s content available on Game Pass did not outweigh the potential harm to competition in the UK cloud gaming market. Blocking the deal, the CMA believes, will allow market forces to continue shaping the development of cloud gaming without the need for regulatory intervention.

Conclusion:

The CMA’s decision to prevent the Microsoft-Activision acquisition highlights the importance of a free, competitive market in driving innovation and choice for consumers. As cloud gaming continues to grow in popularity, maintaining a level playing field for companies in the industry becomes crucial to ensure gamers have access to diverse and innovative gaming experiences.