Antitrust Probe Leads to UK Blocking Microsoft-Activision Merger

In a surprise move, the UK Competition and Markets Authority (CMA) has blocked Microsoft’s proposed acquisition of Activision-Blizzard, the video game company responsible for popular franchises such as Call of Duty, World of Warcraft, and Candy Crush.

The $69 billion deal, which would have been one of the largest in the history of the video game industry, was first announced in January of this year. At the time, Microsoft CEO Satya Nadella said the acquisition was a “big bet” on the future of gaming and would help the company “bring new experiences to life for a billion gamers worldwide.”

But the CMA, which is responsible for ensuring competition in the UK market, launched an investigation into the deal in February, citing concerns about its potential impact on the video game industry. After a thorough review, the CMA announced on April 26 that it would block the deal, stating that it would result in “a substantial lessening of competition” in the UK.

In a statement, CMA CEO Andrea Coscelli said, “This is a significant deal for the gaming sector, and we are concerned that it could reduce competition in the supply of certain games and lead to higher prices for consumers. It is our responsibility to protect competition, and we cannot let this deal go ahead.”

Microsoft and Activision-Blizzard have both expressed disappointment with the decision and said they are considering their options. Microsoft, in particular, has been heavily investing in its gaming division in recent years and has been acquiring various studios to develop exclusive content for its Xbox consoles and Game Pass subscription service.

The company has also been looking to expand its reach in the PC gaming market, which has been dominated by companies such as Valve and Epic Games. Acquiring Activision-Blizzard would have given Microsoft access to a massive library of popular games and a large community of players.

But the CMA’s decision reflects a growing trend of antitrust scrutiny in the technology industry, particularly in the wake of high-profile acquisitions such as Facebook’s purchase of Instagram and WhatsApp and Google’s acquisition of Fitbit. Regulators around the world are increasingly concerned about the concentration of power in the hands of a few large companies and the potential harm it could cause to competition and innovation.

The CMA’s decision is also likely to have implications beyond the UK market. The European Commission, which is responsible for overseeing competition in the EU, has also been reviewing the Microsoft-Activision deal and is expected to make a decision in the coming weeks.

The US Federal Trade Commission (FTC) is also reportedly reviewing the deal, although it is not clear whether it will take any action. In the US, antitrust enforcement has been a contentious issue in recent years, with some politicians and activists calling for stricter regulations and others arguing that such measures would stifle innovation and harm consumers.

Regardless of the outcome, the decision by the CMA is a significant setback for Microsoft and a reminder that even the biggest companies in the world are subject to scrutiny and regulation. The company will need to carefully consider its next steps and may need to revise its strategy for expanding in the gaming market.