The UK’s Competition and Markets Authority (CMA) announced that it has blocked Microsoft’s USD 68.7 billion acquisition of US video game holding company Activision Blizzard. Considering that Microsoft already owns the streaming video game service Xbox, the most widely used PC operating system (Windows), and a worldwide cloud computing infrastructure (Azure and Xbox Cloud Gaming), which together account for an estimated 60%–70% of global cloud gaming services, the CMA found that this transaction would strengthen Microsoft’s market power.
Even though Microsoft proposed behavioural remedies such as licensing specific Activision games to its competitors, the CMA stated that Microsoft’s proposition was inadequate since “it did not sufficiently cover different cloud gaming service business models, including multigame subscription services” and underlined that “there are significant risks of disagreement and conflict between Microsoft and cloud gaming service providers, particularly over a ten-year period in a rapidly changing market”. Microsoft is expected to appeal the case to the UK Competition Appeals Tribunal to reverse the decision. While the competition authorities of South Africa, Saudi Arabia, Brazil, Serbia, Chile, and Japan have already cleared the deal, all eyes are now on the US Federal Trade Commission and the European Commission. For more information about competition law assessments in the gaming industry, please find our article from September 2022 here.