Microsoft’s US$69 billion Activision deal quashed by UK regulators over nascent cloud gaming market
- The UK Competition and Markets Authority blocked the acquisition by arguing that Activision titles like Call of Duty would bolster Microsoft’s cloud gaming edge
- Analysts were surprised by the move, as antitrust regulators typically target deals that threaten competition in mature, developed markets
Analysts expressed surprise on Wednesday that UK regulators would move to thwart a deal in a nascent field where companies are still finding their footing. Cloud gaming is dwarfed by the larger console-based business.
The UK Competition and Markets Authority (CMA) ruled on Wednesday that Activision titles like Call of Duty would bolster Microsoft’s edge over rivals in cloud gaming, threatening growth in the sector. The companies plan to appeal.
Titles like World of Warcraft and Overwatch “will be important for the competitive offering of cloud gaming services as the market continues to grow and develop”, the authority said in a statement. The regulator concluded that under Microsoft, Activision would not have enough incentive to seed its games across multiple services.
The UK decision could ultimately stop the deal if Microsoft is unable to win on appeal. The merger agreement expires on July 18, though it can be extended. The break-up fee is US$3 billion.