The Markets and Competition Authority of United Kingdom (CMA) has decided to prevent the acquisition by Microsoft of Activision Blizzardresponsible of video game like the saga’call of duty‘, due to concerns that the deal will disrupt the future of the cloud gaming market, reducing innovation and choice for UK gamers.
The final decision of the CMA against the transaction, agreed a year ago at about 69,000 million dollars (62,649 million euros), comes after the solution proposed by Microsoft “did not effectively address” the regulator’s concerns regarding from the cloud gaming sector and which had been previously raised by the Authority in its preliminary assessment.
CMA released an in-depth review of the Microsoft-Activision deal in September 2022 and tentatively warned in February 2023 that the merger could see Microsoft further bolster its position in the cloud gaming sector, stifling competition. in this growing market.
Microsoft has a strong position in cloud gaming services and the evidence available to the CMA showed that it would be commercially beneficial for the Redmond company to make Activision’s games exclusive to its own cloud gaming service.
In this sense, the CMA recalls that Microsoft already represents approximately 60-70% of global cloud gaming services and has other important strengths in the sector by having Xboxthe leading operating system for PC (Windows) and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming).
Monthly active users in the UK more than tripled from the start of 2021 to the end of 2022 and are forecast to be worth up to £11bn globally and around £1bn. million euros) in the UK by 2026.
“The deal would bolster Microsoft’s market advantage by giving it control over major gaming content like ‘Call of Duty,’ ‘Overwatch‘ and ‘world of warcraft‘” the CMA notes, adding that the available evidence indicates that, absent the merger, Activision would begin offering games via cloud platforms in the foreseeable future.
In this regard, he notes that the cloud allows UK gamers to avoid buying expensive gaming consoles and PCs and gives them much more flexibility and choice in how they play, advising that allowing Microsoft to take such a strong position in the cloud gaming market just as it begins to grow rapidly “could undermine the innovation that is crucial to the development of these opportunities.”
As for the Microsoft proposal, the regulator considers that it contained a number of significant deficiencies related to the rapidly growing nature of cloud gaming services, as it did not sufficiently cover the different business models of cloud gaming services. , including multi-game subscription services, nor was it sufficiently open to providers who might wish to offer versions of games on non-Windows PC operating systems.
Likewise, the CMA considers that the proposal would standardize the terms and conditions in which the games are available, instead of these being determined by the dynamism and creativity of the competition in the market, as would be expected in the absence of the merger. .
“Accepting Microsoft’s remedy would inevitably require some degree of regulatory oversight by the CMA. Conversely, avoiding the merger would allow market forces to continue to operate and shape cloud gaming development without this regulatory intervention.” apostille.
On the other hand, the CMA considered that the option to have Activision’s content on Game Pass, while beneficial for some customers, would not outweigh the overall damage to competition that this merger would cause, particularly given the incentive for Microsoft to increase the cost of this post-transaction payment formula to reflect the addition of Activision games.
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“It is vital that we protect competition in this exciting and emerging market,” said Martin Coleman, chair of the CMA’s independent panel of experts, for whom Microsoft already enjoys a strong position and advantage over other competitors in cloud gaming “and This deal would reinforce that advantage.”
“Microsoft engaged constructively with us to try to address these issues and we are grateful for that, but their proposals were ineffective in remedying our concerns and would have replaced competition with ineffective regulation in a dynamic new market,” he added.