Yes, the story continues as predicted and it seems that we’ve entered a new phase. Last year, Microsoft bought Activision Blizzard for a whopping $68.7 billion, a development that came as a shock even to the gaming industry, which is used to big acquisitions, but was soon complicated by the objections of rival console maker Sony and countries’ trade and competition authorities.
We thought that the final decision was very close after the countries approved the acquisition one by one in the past months, but the UK’s Competition and Market Authority (CMA) raised a red flag by deciding that this acquisition could have negative consequences for its competitors and the market as a whole. The CMA emphasized the issue of monopoly and raised concerns that the acquisition “could lead to fewer choices for UK gamers, higher prices, less innovation and unpredictable changes in the cloud market”, while Microsoft said it would take the decision to court.
Microsoft President Brad Smith stated that they are “fully committed to the acquisition process and will appeal the decision” and described the CMA’s decision as the darkest day in Microsoft’s 40 years in the UK.
“We have already signed contracts to make Activision Blizzard’s popular games available on 150m devices, and we remain committed to reinforcing these agreements through regulatory remedies. We’re especially disappointed that after lengthy deliberations, this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works.”
Brad Smith’s criticisms did not stop there. In an interview with the BBC he said: “It does more than shake our confidence in the future of the opportunity to grow a technology business in Britain than we’ve ever confronted before. There’s a clear message here – the European Union is a more attractive place to start a business than the United Kingdom. The English Channel has never seemed wider,”
This decision, which comes on the heels of new Prime Minister Rishi Sunak‘s messages that he “wants to make the UK the center of technology”, is certainly not the end of the road. Microsoft will appeal the decision and will probably continue negotiations with Sony and Nintendo at some point. It remains to be seen whether this will lead to a domino effect and reverse the recent positive sentiment on acquisitions.
