Microsoft’s planned acquisition of Activision Blizzard is facing a major glitch. UK regulators on Wednesday rejected the roughly $69 billion deal, saying it would result in higher prices and fewer choices for gamers.
The Competition and Markets Authority said moves by Microsoft, such as promising to bring blockbuster Activision game Call of Duty to Nintendo consoles, didn’t effectively address concerns that the deal would stifle competition in cloud gaming.
“Cloud gaming needs a free, competitive market to drive innovation and choice,” said Martin Coleman, chair of an independent panel investigating the deal for the CMA, in a release.
Microsoft and Activision announced the $68.7 billion deal, the largest ever for the software maker and also within the video game industry, in January 2022. It would give the Xbox maker control of one of the biggest video game companies in the world, including popular gaming franchises like Call of Duty, Overwatch and World of Warcraft.
Microsoft has been trying to convince regulators around the world, including the US Federal Trade Commission, that its acquisition won’t hurt competition in the video game industry. Microsoft has positioned the deal, along with earlier acquisitions like that of Fallout and Doom maker Bethesda, as central to efforts to build up content that bolsters 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 final word on this deal.” Microsoft and Activion plan to appeal the decision, but face an uphill battle.
The threshold for overturning a CMA ruling is reportedly high. An appeals tribunal looks only at whether a CMA decision was “legal and rational and whether proper 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 Activision Blizzard’s popular games available on 150 million more devices.”