27 April: Microsoft has expressed its disappointment and frustration after its proposed $68.7bn (£55bn) takeover of US video game company Activision Blizzard was blocked by the UK’s Competition and Markets Authority (CMA).
The CMA said on Wednesday that it had serious concerns that the deal would harm competition and innovation in the cloud gaming market, where people play games online without downloading them.
The CMA said that Microsoft and Activision Blizzard are two of the leading players in this market, which is expected to grow rapidly in the coming years. It said that the deal would give Microsoft access to popular games such as Call of Duty, World of Warcraft and Candy Crush, which could make its own cloud gaming service more attractive and harm rival platforms.
The CMA also said that the deal could reduce the quality and variety of games available to consumers, as Microsoft could have less incentive to license Activision Blizzard’s games to other platforms or invest in new games.
Microsoft’s vice chair and president Brad Smith told the BBC Radio 4 Today programme that the company was “very disappointed” about the CMA’s decision, “but more than that, unfortunately, I think it’s bad for Britain.”
He said that the decision sent a clear message that the European Union was a more attractive place to start a business than the UK, and that it would have a negative impact on Microsoft’s UK investment.
He also said that the UK government needed to look hard at the role of the CMA and the regulatory structure, if it wanted to attract investment and make Britain a place “where technology is not only going to flourish, but be created.”
He added that “people are shocked, people are disappointed, and people’s confidence in technology in the UK has been severely shaken” by the CMA decision.
However, the CMA defended its decision, saying that it was its job to do what was best for the people, businesses and economy of the UK, not merging firms with commercial interests.
It said that its decision meant that a range of firms, “large and small”, could continue to compete in this rapidly growing market. This would mean more innovation and more choice for consumers, it said.
“Those are the best conditions to attract investment and support growth,” the regulator added.
Microsoft and Activision Blizzard have said they would appeal the CMA’s decision.
The deal still needs approval from regulators in the US and the EU. But it has fallen at the first hurdle in the UK. The CMA’s decision may scupper the whole takeover.
This deal is important for Microsoft because it wants to strengthen its position in the fast-growing cloud gaming market. It also wants to expand its portfolio of games titles, which include Minecraft, Halo and Forza. Activision Blizzard makes some of the most popular and profitable games in the world, such as Call of Duty, which has sold more than 400 million copies over