The British competition regulator has blocked Microsoft’s purchase of Activision Blizzard on Wednesday, arguing that it threatens to curb consumer choice in online video games. The Competition and Markets Authority “prevented the purchase of Activision due to fears that the deal will alter the future of the cloud gaming market,” the regulator said in a statement. Activision Blizzard shares have plunged more than 10% at the open on Wall Street.
The US authorities already filed a lawsuit last December to stop the purchase, which was announced in January last year for 68.7 billion dollars (about 62.2 billion euros at current exchange rates). This would have allowed Microsoft to have control over very popular video games created by Activision such as call of duty, Overwatch either world of warcraft. It was the largest operation in the 46-year history of the manufacturer of software and, according to the UK authorities, a danger to free competition.
The Competition Authority points out in its statement that Microsoft would find it “commercially beneficial” if Activision’s games were exclusive to its own cloud gaming service. In addition, they warn, the company has a strong position in the cloud video game market: according to their data, the company founded by Bill Gates already has between 60% and 70% market share, and the merger could further strengthen the position of the technology giant in the sector.
Cloud gaming
Video games in the cloud allow players to save on the purchase of high-performance consoles or computers. To play, they connect directly to the server that companies like Microsoft make available to them, from devices that on their own could not support the games. It is, the British authorities point out, a market that is growing and is positioned as the future of the sector.
According to the statement issued by the competition authority, monthly active users in the United Kingdom more than tripled from the beginning of 2021 to the end of 2022. The value of this market is expected to reach 11 billion pounds in all the world (12,420 million euros). By way of comparison, they defend, sales of recorded music in the United Kingdom in 2021 amounted to 1,100 million pounds (1,240 million euros).
The decision, they defend from Activision Blizzard, “contradicts the ambitions of the United Kingdom to become an attractive country to create technology companies.” “We will re-evaluate our growth plans for the United Kingdom,” they warn. The company has advanced that they will work together with Microsoft to get it annulled, and its CEO, Bobby Kotick, has stated in a public letter to his employees that the blockade is far from being “the last word.”
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