The Competition and Markets Authority's (CMA) decision to block Microsoft's proposed acquisition of Activision is due to concerns over the impact on the cloud gaming market, reducing innovation and choice.
CMA Blocks Microsoft's Activision Purchase, But Why?
Microsoft's proposed acquisition of Activision, one of the most popular video game publishers in the world, has been blocked by U.K. regulators, the Competition and Markets Authority (CMA) over concerns that the deal would give Microsoft a stronger position in cloud gaming, stifling competition in this growing market.
The CMA's review found that Microsoft's ownership of Activision would reinforce its advantage in the market by giving it control over important gaming content. Microsoft already accounts for an estimated 60-70% of global cloud gaming services and has other important strengths in cloud gaming from owning Xbox, the leading PC operating system (Windows), and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming).
Would Microsoft Undermine Innovation? No!
The UK cloud gaming market is growing fast and is forecast to be worth up to £11 billion globally and £1 billion in the UK by 2026. By allowing Microsoft to take such a strong position in the cloud gaming market just as it begins to grow rapidly, there is a risk of undermining the innovation that is crucial to the development of these opportunities.
Microsoft's proposed remedy to address the CMA's concerns did not sufficiently cover different cloud gaming service business models, was not sufficiently open to providers who might wish to offer versions of games on PC operating systems other than Windows, and would standardize the terms and conditions on which games are available.
Preventing the merger would effectively allow market forces to continue to operate and shape the development of cloud gaming without regulatory intervention. While some customers may benefit from having Activision's content available on Game Pass, the CMA found that this new payment option would not outweigh the overall harm to competition in cloud gaming in the UK.
Martin Coleman chair of the independent panel of experts conducting the investigation, said that cloud gaming needs a free, competitive market to drive innovation and choice, and that is best achieved by allowing the market to continue to operate without this regulatory intervention.
Meanwhile, Sony and Square Enix
Tanizzle is team Xbox (and Microsoft), and doesn't like this decision at all. Beating us to it (by tweeting something we were similarly thinking about), here's what a user said on Twitter: "So how come Sony is allowed to hold Square Enix hostage, without even a proper merger, and that's not seen as problematic/unethical while completely skirting some of the logic and law outlined in the ruling? Weird and definitely not biased against Microsoft Xbox."
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