Microsoft’s planned acquisition of Activision Blizzard is facing a major problem. British regulators on Wednesday rejected the $69 billion deal, saying it would lead to higher prices and fewer options for players.
The Competition and Markets Authority said moves by Microsoft, such as promising to bring Activision’s popular game Call of Duty to Nintendo’s consoles, did not effectively address concerns that the deal would stifle competition in cloud gaming.
“Cloud gaming needs a free, competitive marketplace to drive innovation and choice,” Martin Coleman, chair of an independent panel investigating the CMA deal, said in a statement.
Microsoft and Activision announce a $68.7 billion deal, the largest ever for a software maker and also in the video game industry, in January 2022. It will give the Xbox maker control of one of the largest video game companies in the world, including popular game franchises like Call of Duty. of Duty, Overwatch, and World of Warcraft.
Microsoft is trying to convince regulators around the world, including the US Federal Trade Commission, that its acquisition will not harm competition in the video game industry. Microsoft has positioned the deal, along with previous acquisitions like Fallout and Doom company Bethesda, as central to efforts to build content that augments its Game Pass subscription service and cloud gaming efforts.
On Wednesday, Activision Blizzard CEO Bobby Kotick told employees that the CMA’s decision is “far from the last word on this deal.” Microsoft and Activion plan to appeal the decision, but they face an uphill battle.
It is said that the threshold for annulment of the CMA’s decision is high. The appeals court is only looking at whether the CMA’s decision was “lawful and reasonable and whether appropriate procedure was followed,” according to the Wall Street Journal.
In a statement posted to Twitter, Microsoft President Brad Smith said the company remains “fully committed” to the acquisition, noting that it has “already signed contracts to make popular Activision Blizzard games available on an additional 150 million devices.”