After the Capital Markets Authority’s decision to veto Microsoft’s Activision deal in Britain, the computer software giant plans to appeal.
UK Competition and Markets Authority he have blocked Microsoft’s acquisition of game publisher Activision Blizzard (NASDAQ:ATVI). On Wednesday, the UK’s largest regulator opposed Microsoft’s acquisition of “Call of Duty” publisher. The ruling comes a month after Britain’s Capital Markets Authority deemed the tech giant’s imminent takeover of Activision not threatening video game competition. However, the British competition regulator now believes that Microsoft’s ownership of Activision could hinder competition in the cloud gaming market.
In a press release, the Capital Market Authority clarified:
“Allowing Microsoft to take such a strong position in the cloud gaming market at a time when it is beginning to grow rapidly would risk undermining the innovation necessary to develop these opportunities.”
The London-based non-ministerial government department also fears that Microsoft Corporation (NASDAQ:MSFT) could control Activision games exclusively for its cloud gaming platform. Such a potential move would only allow Xbox Game Pass to access the publisher’s spoiled library at the expense of other major gamers.
Microsoft takes the decision of the Capital Markets Authority to block the Activision deal in Britain
The CMA’s decision to block Microsoft’s $69 billion acquisition of the game publisher is a heavy blow to the computer software giant. Microsoft had hoped to convince the authorities in Britain that its ownership of Activision would still be beneficial to the competition. However, the Redmond, Washington company plans to appeal the decision.
Even though cloud gaming is still in its infancy, Microsoft has already identified this technology as the next mainstream way to play games. The tech giant previously tried to assuage the CMA’s concerns regarding any perceived monopolistic tendencies — but failed. Microsoft’s perks include sharing Activision’s game properties with other competitors for a long time.
However, the CMA wondered whether such agreements would hold up over time in an increasingly dynamic market. Given the terms and conditions offered by Microsoft, the UK regulator said that “there is a significant risk of contention and conflict between Microsoft and cloud gaming service providers, especially over a decade in a rapidly changing market.”
Meanwhile, Microsoft Vice President and President Brad Smith, expressing Microsoft’s unwavering commitment to the acquisition of Activision, said:
“We remain committed to strengthening these agreements through regulatory remedies.”
Smith also explained that Microsoft has already signed contracts that will make Activision’s games available on hundreds of millions of devices. The vice president of the company expressed his disappointment with the decision of the Capital Markets Authority after “prolonged deliberations”. According to Smith, the CMA ruling rejects a pragmatic way to address competition concerns and reflects a misunderstanding of the cloud gaming market. In addition, Smith noted that the CMA’s stance discourages technological innovation and investment.
The Activision CEO is confident of a favorable hearing in the appeals process
Activision CEO Bobby Kotick told employees about the video game publisher’s joint appeal process with Microsoft in a letter to employees. Kotick was confident of a fair hearing from the UK Competition Court of Appeal because the deal was good for competition.
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Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify cryptocurrency stories down to the bare essentials so that anyone anywhere can understand without much background knowledge. When not in the depths of cryptocurrency stories, Tolo enjoys music, loves to sing, and is a movie lover.
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