Microsoft’s journey into the metaverse encounters a roadblock. Microsoft planned to acquire Activision Blizzard for $69 billion, making it one of the largest tech deals in history. However, on April 26th, the UK Competition and Markets Authority (CMA) announced its refusal to approve the Microsoft-Activision Blizzard acquisition. Microsoft has been planning this acquisition since last year to enhance its competitiveness in the cloud gaming market.
The CMA believes that Microsoft’s motives behind the acquisition are primarily driven by commercial interests. This acquisition could potentially reduce consumer choice, weaken competition in the gaming console industry, and hamper innovation in the cloud gaming sector.
Microsoft could leverage its position to exclusively release popular games, such as Call of Duty, on its own Games Pass platform and offer Activision Blizzard games solely within its own cloud gaming service. This ownership of Activision Blizzard may harm competition in the cloud gaming market.
In its specific ruling report, the CMA stated that while offering Activision Blizzard games on Microsoft’s Xbox Game Pass subscription service could benefit certain customers, it could not offset the harm caused by the merger, especially considering the potential increase in Game Pass subscription fees due to the addition of high-value games from Activision Blizzard. Additionally, Microsoft currently holds a significant portion of the global cloud gaming market.
The CMA is concerned that Microsoft, following the acquisition of Activision Blizzard, would further expand its monopoly in the global cloud gaming market by leveraging the latter’s IP influence.