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In a surprise move, Microsoft’s planned $68.7 billion acquisition of video game publisher Activision Blizzard has been prohibited by the British regulator, which earlier in the year warned that the mega-deal “could harm U.K. gamers” and “substantially reduce” competition.
Britain’s Competition and Markets Authority (CMA) published its final findings well more than a year after the technology giant had unveiled a deal to acquire Activision Blizzard, led by CEO Bobby Kotick.
In its report, the CMA said it found that merger may be expected to result in a “substantial lessening of competition” in cloud gaming services in the U.K., and Microsoft would find it “commercially beneficial to make Activision’s titles exclusive to its own cloud gaming service.” With Microsoft already having an estimated 70-80 percent market share in that market, it claimed that “even a moderate increment to Microsoft’s strength may be expected to substantially reduce competition,” which would be to the “detriment of current and future cloud gaming users.”
In response, Activision CEO Bobby Kotick vehemently attacked the decision and issued a warning about its future investment in the U.K.
“The CMA’s report contradicts the ambitions of the UK to become an attractive country to build technology businesses,” he wrote. “We will work aggressively with Microsoft to reverse this on appeal. The report’s conclusions are a disservice to UK citizens, who face increasingly dire economic prospects. We will reassess our growth plans for the UK. Global innovators large and small will take note that – despite all its rhetoric – the UK is clearly closed for business.”
The acquisition, the largest in Microsoft’s history, would have made the tech powerhouse the world’s third-largest gaming company by revenue, behind Tencent and Sony. The transaction, which has faced opposition from such rivals as Sony and U.S. regulators, would bring together Microsoft, which owns the Xbox game platform and Xbox Game Studios (owner of Bethesda Softworks and 343 Industries, among other game publishers) and Activision, maker of the Call of Duty, Warcraft, Tony Hawk and Candy Crush franchises, reshaping the gaming landscape.
In December, the Federal Trade Commission sued to block the gaming deal, alleging that it would enable Microsoft, led by CEO Satya Nadella, to suppress competition in gaming. It pointed to the company’s history of acquiring competitors to “suppress competition from rival consoles,” including its purchase of ZeniMax, parent company of Bethesda Softworks and maker of The Elder Scrolls, Fallout and Starfield.
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