Microsoft’s proposed acquisition of Activision Blizzard hit a major snag as the UK Competition and Markets Authority has blocked the landmark deal. The antitrust watchdog cited cloud gaming concerns as the reason why the deal didn’t get approved.
While the deal has not gone ahead, Microsoft and Activision have both said that they will appeal the decision. Activision Blizzard CEO Bobby Kotick said that the decision is not the final word on the deal and that the company has already started the appeal process.
“Today, the Competition and Markets Authority, a regulatory agency in the UK, decided not to approve our merger with Microsoft,” Kotick said. “This isn’t the news we wanted – but it is far from the final word on this deal.”
He adds, “Alongside Microsoft, we can and will contest this decision, and we’ve already begun the work to appeal to the UK Competition Appeals Tribunal. We’re confident in our case because the facts are on our side: this deal is good for competition.”
According to Kotick, he will personally advocate and help regulators understand the “competitive dynamics in our industry.” This is not the first time that Activision’s CEO said that regulators do not understand the industry.
Activision’s CEO also criticized the ruling, saying that “the CMA’s decision holds, it would stifle investment, competition, and job creation throughout the UK gaming industry.”
Activision’s Chief Communications Officer Lulu Cheng Meservey also echoed Kotick’s statement. She said that the decision is a disservice to the UK people and sends a message that the UK is closed for business.
“This report is also a disservice to UK citizens, who face increasingly dire economic prospects, and we will need to reassess our growth strategy in the UK,” Meservey tweeted. “Global innovators large and small will take note that – despite all its rhetoric – the UK is closed for business.”
The CMA’s report today is a major setback for the UK’s ambitions to be a tech hub, and we will work with Microsoft to reverse it on appeal.
This report is also a disservice to UK citizens, who face increasingly dire economic prospects, and we will need to reassess our growth…
— Lulu Cheng Meservey (@lulumeservey) April 26, 2023
Activision also believes that the merger will be beneficial not only for the parties but also for the UK tech workforce and players around the world. Microsoft and Activision Blizzard have stated that the deal will bring more games to over 150 million people around the world.
The UK CMA said that appeals will be dealt with within 9 months. This means that the deal will not likely be completed this year.
We do not know what the UK CMA’s decision will mean for the EU Commission and US FTC’s ruling on the deal. The EU Commission has set an extended deadline of May 22 to finalize its decision. The FTC has filed a lawsuit to block the deal.
As it stands, Microsoft is in real danger of paying a hefty fine as it may fail to meet the deadline to finalize the deal.
