Microsoft's 69 Billion Activision Deal

Microsoft’s $69 Billion Activision Deal Blocked by UK Regulator

British regulators have blocked Microsoft’s $69 billion acquisition of video game maker Activision Blizzard, citing concerns that it would stifle competition in the cloud gaming market. The Competition and Markets Authority (CMA) released its final report on Wednesday, stating that “the only effective remedy” to prevent the loss of competition resulting from the deal “is to prohibit the Merger.”

The all-cash deal, which would have been the largest in tech industry history, is also facing opposition from rivals such as Sony and scrutiny from regulators in the US and Europe. The CMA’s decision comes before the European Union and the US Federal Trade Commission’s (FTC) rulings, which are due later this year. The FTC has already sued to veto the transaction and has scheduled a hearing in August.

Microsoft expressed disappointment in the decision and vowed to appeal. Brad Smith, Microsoft’s President, stated that the UK watchdog’s decision “rejects a pragmatic path to address competition concerns” and discourages technology innovation and investment in the United Kingdom. Activision also plans to “work aggressively with Microsoft to reverse this on appeal.”

The CMA believes that the merger could lead to higher prices, fewer choices, and less innovation for UK gamers. The watchdog’s report suggests that without the merger, Activision would be able to start providing games on cloud platforms in the future. The deal would solidify Microsoft’s advantage in the market by giving it control over popular franchises such as Call of Duty, Overwatch, and World of Warcraft.

Microsoft's 69 Billion Activision Deal
Image credit- microsoft

Microsoft has been fighting the regulatory battle in the UK and Europe with press conferences and advertisements in British newspapers to influence sentiment on the deal. If the acquisition is ultimately blocked, Microsoft could face a breakup fee of up to $3 billion.

Activision’s CEO, Bobby Kotick, remains confident in their case, stating that “the facts are on our side, this deal is good for competition.” However, some experts believe there may not be a path forward for Microsoft, as there has never been a successful appeal in the UK on an antitrust decision. The European Commission is expected to issue its final decision on the deal on May 22.

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