UK regulators block Microsoft-Activision deal over antitrust concerns

The largest tech deal in history, Microsoft's attempt to buy Activision Blizzard, has been denied by the United Kingdom due to the antitrust regulator's concerns over the impact on competition and consumers. British regulators stated that the sole effective remedy to guarantee healthy competition was to prohibit the merger. Representing a considerable blow to Activision and Microsoft, both companies plan to appeal the decision. Additionally, other regulators in the US and Europe are investigating the $69 billion, all-cash deal with similar concerns.

Comprising some of the world's most popular and profitable video game franchises, including Call of Duty, World of Warcraft, and Diablo, Activision Blizzard is one of the largest video game developers globally. Contrarily, Microsoft sells Xbox consoles and runs cloud-based video game streaming services, in addition to the Xbox Game Pass subscription service. In rejecting what would have been Microsoft's acquisition of Activision Blizzard, the UK's Competition and Markets Authority has stated that the deal could have escalated the existing 60-70% of cloud gaming market share that Microsoft already possesses globally.

Comparable concerns have been raised by the US Federal Trade Commission, which has challenged the deal in court, while the EU's Competition and Markets Authority will provide its decision on May 22. Cloud gaming enables gaming on various digital devices, from phones to tablets, eliminating the requirement to pay for expensive gaming consoles and computers.

Microsoft proposed numerous concessions, including licensing Activision titles to Nintendo and other cloud gaming providers, such as Call of Duty, for ten years. The firm presented Sony with a similar agreement, which the electronics and gaming firm refused. Although the UK regulator carefully examined these alternative remedies, it concluded that too much oversight would be required, hampering cloud computing's natural development.

Activision expressed its disappointment at the decision and criticized the UK's actions, describing the country as "closed for business." The company pledged to work aggressively with Microsoft to overturn the ruling. Microsoft remains steadfast in its commitment to the acquisition and its determination to appeal the decision, warning that this decision could discourage technology innovation and investment in the UK. Brad Smith, President of Microsoft, stated that the verdict reflected a flawed comprehension of the market and the relevant cloud technology.