The UK’s competition regulator prevented Microsoft’s proposed merger with Activision Blizzard, impeding the company’s efforts to further expand in the gaming industry, the Wall Street Journal reported.
The UK Competition and Markets Authority issued a statement expressing concern about the potential impact of a deal on Microsoft’s market power in cloud-based video games.
The regulator noted that Microsoft already holds a significant share of the global cloud gaming market and has additional advantages due to its ownership of Xbox.
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“The cloud allows UK gamers to avoid buying expensive gaming consoles and PCs and gives them much more flexibility and choice as to how they play,” the UK regulator wrote. “Allowing Microsoft to take such a strong position in the cloud gaming market just as it begins to grow rapidly would risk undermining the innovation that is crucial to the development of these opportunities.”
The regulator declined Microsoft’s proposed requirements for cross-platform gaming, citing concerns about limited accessibility and excessive regulatory oversight.
“By contrast, preventing the merger would effectively allow market forces to continue to operate and shape the development of cloud gaming without this regulatory intervention,” the regulator wrote.
In response to the concerns raised by the regulator, Microsoft proposed remedies including specific requirements for game offerings across platforms over a ten-year period. Despite these efforts, the proposals were ultimately rejected.
“Given the remedy applies only to a defined set of Activision games, which can be streamed only in a defined set of cloud gaming services, provided they are purchased in a defined set of online stores, there are significant risks of disagreement and conflict between Microsoft and cloud gaming service providers, particularly over a ten-year period in a rapidly changing market,” the CMA said.
