In a stunning move, the UK Competition and Markets Authority (CMA) has blocked Microsoft’s proposed $69 billion acquisition of video game giant Activision Blizzard. The decision is a significant blow to Microsoft, which had sought to expand its gaming portfolio with the California-based company, known for its blockbuster franchises such as Call of Duty and World of Warcraft.
The CMA’s decision was based on concerns that the deal would “eliminate a potential competitor and stifle innovation.” In a statement, the watchdog said, “We have found that this merger would significantly reduce competition in the UK video games market, which could lead to higher prices, fewer games, and poorer quality services for customers.”
The decision by the CMA is a setback for Microsoft’s gaming aspirations, particularly as the company has been looking to grow its market share in the gaming industry, which has experienced a boom in recent years due to the pandemic. The proposed acquisition of Activision Blizzard was seen as a key part of this strategy, as it would have given Microsoft access to an enormous library of popular games, as well as a vast network of players and content creators.
However, this is not the first time that Microsoft has faced regulatory hurdles when it comes to mergers and acquisitions. In 2012, the company was forced to abandon its bid to buy Yahoo when it became clear that antitrust regulators would not approve the deal.
In the aftermath of this latest decision, Microsoft has said that it will “review its options” in relation to the proposed acquisition. It is not yet clear whether the company will appeal the CMA’s decision, or seek to negotiate a compromise that would allow the purchase to go ahead with certain conditions attached.
Overall, the decision by the UK watchdog highlights the importance of antitrust regulations in today’s global economy, particularly when it comes to mergers and acquisitions. While Microsoft may be disappointed with the outcome of this latest bid, the CMA’s decision serves as a timely reminder that even the biggest players in the tech industry are not above the law when it comes to competition and consumer protection.