UK Blocks MicrosoftActivision Gaming Deal, Biggest In Tech

LONDON (Reuters) /PRNewswire/ - Britain's antitrust authorities on Wednesday blocked Microsoft's $69 billion takeover of video game maker Activision Blizzard.

In its final report, the Competition and Markets Authority said the "only effective solution" to the season's heavy losses was to "ban mergers". The company appealed.

The cash deal, announced 15 months ago, has faced stiff opposition from rival Sony, which makes the PlayStation gaming system, and is being scrutinized by regulators in the US and Europe over fears it could hurt Microsoft and its Xbox console. It gives control. Successful franchises such as Call of Duty and World of Warcraft.

The British regulator's decision "comprised a lot of people" and added to the global uncertainty surrounding the deal, said Liam Dene, wildlife industry analyst at Omdia.

"In terms of Microsoft and Activision, it's a pretty big market to put in a really tough team, but if you make the wrong decisions from the European Commission in a few weeks, things are going to get a lot worse," he said.

Concerns from UK regulators center on how the deal will affect streaming cloud gaming to tablets, phones and other devices, freeing gamers from buying expensive gaming consoles and PCs. Players can continue to play Activision's flagship titles on the platforms they are used to, including mobile games like Candy Crush.

Cloud gaming has the potential to change the industry by giving people more choices about how and where they play, said Martin Coleman, the Competition and Markets Authority's independent panel of experts who examined the deal.

"This means maintaining competition in this growing and attractive market is very important," he said.

The decision underlines Europe's reputation globally for trying to curb the power of big tech companies. The day before, the UK government introduced legislation that will give regulators more powers to protect consumers from online fraud and fake reviews and increase digital competition.

The UK decision ends Microsoft's hopes that a positive outcome will help settle the US Federal Trade Commission case. The trial before an internal FTC judge will begin on August 2. Meanwhile, the EU decision must be taken by May 22.

Activision said the regulator's decision bodes ill for international investors in the UK at a time when the UK economy is facing serious challenges.

The California-based game maker said it would work hard with Microsoft to appeal.

We will reassess our UK growth plans. Global innovators, big and small, will recognize that, for all the talk, the UK is clearly closed for business,” said Activis.

Microsoft, based in Redmond, Washington, will not give up, he said.

"We are fully committed to this acquisition and it will be exciting," President Brad Smith said in a statement. The decision rejects a pragmatic approach to tackling competition issues and stifles technological innovation and investment in the UK, he said.

"Especially after much discussion, we are extremely disappointed that this decision appears to reflect a lack of understanding of this market and how the relevant cloud technologies work," said Smith.

Activision CEO Bobby Kotick said in a blog post that the two companies had begun filing appeals to the UK Court of Appeal Competition.

This isn't the first time UK regulators have flexed their antitrust muscles on a big tech deal. Previously, parent Facebook Meta banned Giphy, fearing it would stifle innovation and competition. The social media giant appealed the decision in court, but lost and was forced to sell the GIF-sharing platform.

Microsoft has a strong position in the overall cloud computing market, and analysts conclude that the deal will strengthen the company's position in controlling major gaming titles.

To allay concerns, Microsoft has struck a deal with Nintendo and a number of cloud gaming providers to give 10-year licenses a mandatory call - and is offering Sony the same.

Sony's European press office did not respond to a request for comment.

The watchdog said it examined Microsoft's solutions "in great depth" but found they needed control, saying blocking integration would allow cloud play to develop without interruption.

Cloud games are a small part of the UK's £5 billion ($6.2 billion) game market. But expert forecasts point to explosive growth in the coming years, with the number of users set to triple between early 2021 and late 2022, and the cloud gaming market expected to be worth £1 billion by 2026, regulators say.

Last month, they dismissed concerns that the deal would hurt console gaming, saying it wouldn't help if Microsoft restricted Call of Duty to its Xbox consoles.

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AP Technology Writer Matt O'Brien in Providence, Rhode Island, contributed to this report.

Microsoft's acquisition of Activision Blizzard blocked!