Britain will stop Microsoft (MSFT.O) from buying “Call of Duty” maker Activision Blizzard (ATVI.O) for $69 billion because it thinks it would hurt competition in cloud gaming. This is a surprise blow to the biggest deal in gaming history.
On Wednesday, the country’s antitrust regulator said that Microsoft’s promise to give top cloud gaming platforms access to Activision’s multi-billion dollar “Call of Duty” series would not be enough to address its concerns.
Britain will stop Microsoft (MSFT.O) from buying “Call of Duty” maker Activision Blizzard (ATVI.O) for $69 billion because it thinks it would hurt competition in cloud gaming. This is a surprise blow to the biggest deal in gaming history.
On Wednesday, the country’s antitrust regulator said that Microsoft’s promise to give top cloud gaming platforms access to Activision’s multi-billion dollar “Call of Duty” series would not be enough to address its concerns.
Activision makes games like “Candy Crush,” “Overwatch,” and “World of Warcraft.” In U.S. premarket trading, the company’s shares fell 10% to $78, which is lower than Microsoft’s offer price of $95 per share. If the losses keep up, the market value of the company that makes video games was going to drop by almost $7 billion.
Microsoft’s offer to buy Activision was made public in January 2022. The company wanted to strengthen its position in the video game market, which was led by Tencent (0700.HK) and Sony (6758.T).
The deal is the biggest one involving a tech company that the CMA has stopped. It’s another sign that the UK watchdog is ready to take on Big Tech, like when it stopped Facebook-owner Meta from buying Giphy in 2021.
By May 22, Europe will make a decision about the Activision deal. The Federal Trade Commission in the United States also wants to stop it.
The Competition and Markets Authority (CMA) had been worried about how the deal would affect the market for game consoles, which is led by Sony’s PlayStation. Last month, the CMA dropped its worries about how the deal would affect the market.
The only other problem was cloud streaming services, which Microsoft tried to solve by making licencing deals with the owners of streaming platforms like Valve Corp, Nvidia (NVDA.O), and Boosteroid.
It had already offered Sony, a vocal opponent of the deal, a 10-year “Call of Duty” licence as part of a deal to bring the multi-billion dollar series to Nintendo’s Switch.
The CMA said that the world cloud gaming market was expected to be worth $13.7 billion in 2026.
“Cloud gaming is growing quickly and has the potential to change the way games are played, making people less reliant on expensive consoles and gaming PCs and giving them more options for how and where to play games,” said Martin Coleman, the chair of the CMA panel.
“This means that protecting competition in this new and exciting market is very important.”
Xbox Game Pass is a subscription service for users of Microsoft’s Xbox system. PC Game Pass is a similar service for PC users.
The CMA said that Microsoft had between 60% and 70% of the world’s cloud gaming services and had competitive advantages like having Xbox, the Windows PC operating system, and the Azure cloud provider.
The U.S. software giant offered licencing deals to ease the worries, but the CMA said they would only include some Activision games, there was a high chance of argument, and the regulator would have to keep an eye on them.
It has offered the European Commission similar solutions, which Reuters has been told are likely to be accepted.
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