- 29 Eki 2018
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Activision Blizzard, the company behind Call of Duty, said that the UK was "closed for business" after the competition regulator rejected Microsoft's bid to acquire it, which would have been the biggest buyout in video game history.
The Competition and Markets Authority (CMA) blocked the $68.7 billion (£55 billion) cash acquisition due to worries that it would stifle the cloud gaming sector, prompting vehement opposition from both parties to the agreement. Activision Blizzard promised to "reassess our growth plans for the UK," while Microsoft stated it would "discourage technology innovation and investment in the UK."
The partnership would have produced a gaming juggernaut by combining Microsoft's growing roster of first-party developers, its Xbox platforms, and its influence over PC gaming with Activision's multitude of "AAA" games, which also include World of Warcraft, Hearthstone, Candy Crush Saga, and Overwatch.
The restriction comes in response to the CMA's decision to stop Meta from acquiring the animated gif search engine Giphy in October of last year.
The Activision ruling was deemed to be "huge news" by Anne Witt, a lawyer and member of the EDHEC Augmented Law Institute.
She said: “The CMA is the only competition agency globally to have ever prohibited a big-tech merger, and now they’ve done it twice. While the UK is a little behind in terms of platform regulation, the CMA is really taking a leadership role in big-tech merger control.”
Activision Blizzard's case had appeared to be tipping in Microsoft's favor after the Seattle-based business said earlier this month that it would continue to make Call of Duty available on other platforms for at least ten years. In spite of Sony, the owner of the PlayStation, objecting, it claimed that those pledges maintained competition in the home console industry.
However, the CMA ultimately came to the conclusion that if the transaction were permitted, the rapidly developing industry of cloud gaming, which enables consumers to stream video games to play on their phones or TVs without investing in specialized hardware, would be more likely to be distorted.
For a single monthly charge, Microsoft's Xbox Cloud Gaming subscription service grants access to several of its first-party games; Call of Duty would have probably been included in the package.
Gaming is the biggest entertainment industry in the UK, according to Martin Coleman, chair of the investigation's independent panel of specialists. Fast-growing cloud gaming has the potential to revolutionize the gaming industry by changing the way games are played, removing the need for pricey consoles and gaming PCs, and providing users greater flexibility in how and where they play. Therefore, it is crucial that we safeguard competition in this new and exciting sector.
"Microsoft already has a strong position and an advantage over other competitors in the cloud gaming market, and this deal would bolster that advantage, enabling it to thwart new and innovative competitors."
Because Microsoft's proposed remedies did not "sufficiently cover" other cloud-gaming business models, the regulator came to the conclusion that they were insufficient to permit the transaction to proceed. Additionally, it claimed that they placed too much emphasis on defending the rivalry of consoles while neglecting PC gamers who ran non-Windows operating systems like Mac and Linux.
The Competition Appeal Tribunal will hear any appeals from Activision and Microsoft. The body is anticipated to make a final decision before the end of the year if they do.
An Activision Blizzard spokesperson said: “The CMA’s report contradicts the ambitions of the UK to become an attractive country to build technology businesses. We will work aggressively with Microsoft to reverse this on appeal.
"The report's conclusions do the UK's inhabitants, who are facing increasingly bleak economic prospects, a disservice. We'll reevaluate our expansion objectives for the UK. Large and small global entrepreneurs will take note that, despite its rhetoric, the UK is obviously closed for business.
Microsoft said it would appeal. Brad Smith, its vice-chair and president, said: “The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the UK.
“We have already signed contracts to make Activision Blizzard’s popular games available on 150m more devices, and we remain committed to reinforcing these agreements through regulatory remedies. We’re especially disappointed that after lengthy deliberations, this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works.”
