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- The move is a major blow to the US tech giant as it seeks to convince officials that the deal will benefit competition.
- Activision Blizzard shares fell 10% in US pre-market trading.
Activision Blizzard’s Call of Duty: Modern Warfare video game will be inserted into Microsoft’s Xbox One video game console located in Denver, Colorado on Wednesday, January 19, 2022.
Michael Ciaglo | Bloomberg | Bloomberg | Getty Images
LONDON — Britain’s top competition regulator made a move Wednesday to block Microsoft’s takeover of video game publisher Activision Blizzard.
The move is a major blow to the US tech giant as it seeks to convince officials that the deal will help it compete.
Microsoft said it plans to appeal the decision.
Activision Blizzard shares fell 10% in US pre-market trading.
The UK Competition and Markets Authority said it would oppose the deal as it raises competition concerns in the nascent cloud gaming market.
Microsoft may dedicate Activision’s games to its cloud gaming platform, Xbox Game Pass, and cut off distribution to other major players in the space, the CMA said.
Cloud gaming is a technology that allows gamers to access games through a company’s remote server, effectively streaming them like watching a movie on Netflix. The technology is still in its early stages, but Microsoft is betting big on it becoming the mainstream way to play games.
“Microsoft has a strong position in its cloud gaming service, and evidence available to the CMA indicates that Microsoft has determined it would be commercially beneficial to dedicate Activision games to its cloud gaming service. ,” the CMA said in a press release Wednesday.
“To allow Microsoft to occupy such a strong position in the cloud gaming market, which has begun to grow rapidly, would risk undermining the innovation that is vital to the development of these opportunities,” the regulator said.
Microsoft has proposed a CMA remedy to resolve the concerns. This includes “requirements governing which games Microsoft must offer, on which platforms, and on what terms, over a ten-year period,” but the regulator rejected the proposal.
“If the remedies apply only to a defined set of Activision games, and can only be streamed on a defined set of cloud gaming services, purchased through a defined set of online stores will change particularly rapidly with Microsoft. 10-year cloud gaming service provider in the market,” said CMA.
Microsoft has announced its intention to acquire Activision Blizzard for $69 billion in January 2022. This is one of the biggest deals the video game industry has ever seen.
Executives at the Redmond, Wash.-based tech giant believe the acquisition will boost its gaming efforts by adding lucrative franchises like Call of Duty and Candy Crush Saga to its content offering. I’m here.
However, some of Microsoft’s competitors objected to the deal, fearing it would give Microsoft a firmer grip on the $200 billion gaming market. Of particular concern is the possibility that Microsoft will cut off distribution access to certain platforms for Activision’s popular Call of Duty franchise.
In particular, Sony has expressed concern over Microsoft’s acquisition of Activision. The Japanese gaming giant fears Microsoft will make Call of Duty exclusive to the Xbox console in the long term.
Microsoft has tried to allay these concerns by offering Sony, Nintendo, Nvidia, and others a 10-year deal to continue bringing Call of Duty to their respective gaming platforms.
Microsoft says withholding Call of Duty from PlayStation, Nintendo, and other rivals isn’t financially profitable given the licensing revenue they get from keeping the game available on their platforms. claims.
Microsoft president Brad Smith told CNBC last month that the company is offering Sony the same deal as Nintendo.Sony remains opposed to the deal.
The CMA has expressed concern that Microsoft could stifle competition in the nascent cloud gaming market through its Xbox Game Pass subscription service, which offers cloud gaming among its perks. Microsoft promised to bring new Call of Duty titles to Xbox Game Pass on day one.
Cloud gaming, or the ability to access games from your PC or mobile device over the internet, is still in its infancy and requires a strong broadband connection to work well. Cloud gaming accounted for less than 1% of his global internet traffic in 2022, according to network intelligence firm Sandvine.
Microsoft will have to convince other regulators not to block the deal. The EU continues its investigation to assess whether the merger would hurt competition, and the US Federal Trade Commission has filed a lawsuit to block the deal on antitrust grounds.
This is breaking news and will be updated shortly.
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