UK Regulators Block Microsoft’s Activision Deal Over Cloud Gaming Concerns

The Competition and Markets Authority (CMA) has blocked Microsoft's proposed purchase of Activision, one of the world's most popular video game publishers, citing concerns over the future of the fast-growing cloud gaming market. The decision comes after Microsoft's proposed solution failed to effectively address the concerns outlined in the CMA's provisional findings published in February. The blocking of the deal is expected to have significant repercussions in the gaming industry, impacting both Microsoft and Activision as well as gamers.

Reasons for Blocking the Microsoft's Activision Deal

The CMA expressed concerns that the proposed deal would reduce innovation and limit choice in the cloud gaming market. Microsoft's solution to address these concerns was found to have significant shortcomings, leading to the need for regulatory oversight by the CMA. The proposed solution set out by Microsoft was considered insufficient in covering different cloud gaming service business models, lacked openness to providers who may wish to offer games on PC operating systems other than Windows, and would standardize terms and conditions for game availability, instead of promoting competition and creativity in the market.

The UK regulators also considered the potential benefits of the deal, such as the availability of Activision's content on Microsoft's Game Pass subscription service. However, it was determined that these benefits would not outweigh the overall harm to competition in the cloud gaming market, particularly given Microsoft's already dominant position and the potential for increased subscription costs post-merger. You can read the complete press release here.

The blocking of Microsoft's Activision deal is expected to have significant implications in the gaming industry. Microsoft's plans to expand its cloud gaming services and strengthen its market position would be hampered by regulatory intervention. Activision, on the other hand, would not be able to benefit from the resources and reach of Microsoft, potentially affecting its growth and strategic plans. Moreover, gamers may also be impacted by reduced competition and choice in the cloud gaming market, limiting their options and potentially affecting pricing and service offerings.

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