CMA Blocks Microsoft-Activision Acquisition Deal in Final Decision

Microsoft won't be getting its way in the UK.

The UK's Competition and Markets Authority (CMA) had decided to block Microsoft's acquisition of Activision in its final decision regarding the matter, which it recently released.

The competition watchdog previously reversed and changed its provisionary findings regarding Microsoft's acquisition of Activision in late March, saying that the deal will not result in a substantial lessening of competition in console gaming in the UK.

CMA's Final Decision Details

The CMA mentioned in its statement that it had to block Microsoft's acquisition of Activision because the solutions the former company presented had significant shortcomings and would require mandatory oversight from the watchdog itself.

However, it's not the potential exclusivity of the Call of Duty games that put the final nail in the coffin that Microsoft's acquisition deal with Activision is in. The CMA blocked the deal because of its concerns about Cloud Gaming.

The CMA's statement said Microsoft's strong position on cloud gaming services and the evidence it had showed that Microsoft would find it commercially beneficial to make Activision's games exclusive to its cloud gaming service. The competition watchdog continued explaining that Microsoft already has 60-70% of global cloud gaming services and has other "important strengths" in cloud gaming: from owning Xbox and Windows, the leading PC operating system, and a global cloud computing infrastructure in the form of Azure and Xbox Cloud Gaming.

The government agency added that Microsoft's acquisition deal with Activision would reinforce Microsoft's advantage in the market by giving it control over important gaming content such as the Call of Duty franchise and Blizzard's Overwatch and World of Warcraft. Should the merger not happen, the CMA predicts that Activision will start providing games via cloud platforms in the foreseeable future.

The CMA also mentioned that Microsoft's remedies to its concerns are only "behavioral" because they want to regulate the behavior of the businesses involved in a merger, requiring them to act in a way that may be contrary to its commercial incentives.

Microsoft's Response On The Matter

The CMA's decision is despite Microsoft's assertions that making Activision games exclusive to its platform would only hurt itself, as doing so won't be profitable for both companies.

You may remember that a YouGov survey that Microsoft commissioned found that only 3% of all PlayStation users would move from the PlayStation to Xbox if the deal pulled through, while 10.5% of big Call of Duty players would move consoles.

As a result, Microsoft intends to appeal against the decision, with company president Brad Smith saying that Microsoft remains committed to the acquisition deal it made with Activision, per a BBC report. He added that the CMA's decision rejects a "pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom," per The Verge.

Microsoft's appeal will undoubtedly push back its plans to close its acquisition deal with Activision by the end of July.