In what came as a shock to many this morning, U.K. regulator Competition and Markets Authority (CMA) announced its decision to block the Microsoft Activision deal. This news is particularly surprising because the CMA appeared to favor Microsoft in its provisional findings, and a number of high profile publications claimed to have heard that the authority will approve the merger.
Microsoft Activision deal blocked over cloud concerns, not Call of Duty exclusivity
Both Microsoft and Activision released statements expressing disappointment over the decision. The companies have announced that they’ve already begun working together to appeal CMA’s ruling. However, experts say that having a decision made by the CMA overturned is no easy feat.
It’s pertinent to mention that the CMA didn’t block the deal over Sony’s Call of Duty exclusivity concerns or concerns over competition in the console space. The authority has concluded that console business would not have been harmed by the merger. It is competition in the cloud gaming arena that CMA is concerned about. Additionally, it finds Microsoft’s proposed remedies inadequate.
“Cloud gaming needs a free, competitive market to drive innovation and choice,” CMA said. “That is best achieved by allowing the current competitive dynamics in cloud gaming to continue to do their job.”