This acquisition would have accelerated the growth in Microsoft's gaming business across mobile, PC, console and cloud. Photo: AFP/ Eva Hambach
Microsoft’s ambition to rule the gaming world by acquiring gaming developer Activision Blizzard was stopped in its tracks by UK watchdog.
UK regulators have blocked Microsoft’s planned $69 billion (R1.2 trillion) acquisition, citing concerns that the deal would reduce competition in the cloud gaming market.
In its final report, the UK’s Competition and Markets Authority said the merger would result in “significant loss of competition”.
Microsoft’s rival, Sony, feared the deal would give Microsoft exclusive control of popular game franchises, including Call of Duty.
Thus, the only effective remedy would be to prohibit the merger. If the deal wasn’t scrapped, it would have been the biggest all-cash deal in the history of the tech industry.
That said, Microsoft is still not ready to give up on the deal just yet, saying it will appeal the decision, which came into effect when the Federal Trade Commission (FRC) raised concerns in December.
At the time, the FTC voted 3-1 to file a lawsuit to stop the deal. Speaking to the press on Tuesday, Microsoft President Brad Smith expressed his disappointment with the decision.
He also said the decision discourages tech innovation and investment in the United Kingdom.
Activision, meanwhile, vowed to work aggressively with Microsoft to overturn the ruling on appeal.
The deal is crucial for Activision’s future success, which includes an impressive portfolio of AAA games, such as World of Warcraft, Call of Duty, and Overwatch.
Merging with Activision would also make Microsoft the third-largest gaming company, by revenue, following behind Tencent and Sony.
Back in December, Microsoft CEO Satya Nadella said, “Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms”.
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