The CMA’s statement about the deal giving Microsoft too much influence in cloud gaming was unexpected.
The UK competition regulator has unexpectedly blocked Microsoft’s $70bn purchase of Activision Blizzard, the developer of popular games such as Call of Duty, World of Warcraft, and Candy Crush Saga. This would have been the biggest acquisition in gaming history, but unless the companies can successfully appeal the ban in a tribunal, the deal is now dead worldwide.
What was Microsoft’s motivation behind attempting to acquire Activision Blizzard?
Activision Blizzard is a huge global game developer with a vast library of titles, top-selling games, and massive e-sports events. However, the crown jewel of its success is the Call of Duty series, which is released annually by three rotating studios and supported by other developers within the Activision conglomerate. The game’s multiplayer mode, Warzone, alone attracted over 6 million players within its first 24 hours of release, making it a phenomenal success.
Did the Call of Duty franchise play a role in the deal being blocked?
To some extent, yes, but not in the way most people anticipated. Sony, the owner of PlayStation, the leading gaming console, expressed concerns that Microsoft might use its ownership of Call of Duty to harm the console market, either by withholding the game from PlayStation or by producing an inferior version of it. Microsoft assured Sony that it would not do so and proposed a deal to ensure that the game would be available on other platforms for at least ten years. This offer was also taken up by other competitors, including Nintendo.
Will the UK suffer negative consequences as a result of this?
Both Microsoft and Activision Blizzard believe so. Microsoft’s president, Brad Smith, cautioned that the ban would deter technology innovation and investment in the UK. Activision Blizzard’s Chief Communications Officer, Lulu Cheng Meservey, went even further by promising to reconsider the company’s growth plans for the UK. She added that innovators, both big and small, would take note that, despite its rhetoric, the UK was effectively closed for business.
