The UK’s CMA has announced its decision to block Microsoft’s $68.7bn Activision-Blizzard acquisition, citing concerns around the deal’s impact on the Cloud Gaming Market.

Microsoft has suffered a major blow in its pursuit of its $69 billion Activision-Blizzard deal. The Silicon Valley giant aimed to gain a major foothold in the gaming industry with the acquisition. However, the deal has faced staunch opposition, particularly from Sony and several market regulators. It appears this saga might go on much longer after the UK's Competition and Markets Authority (CMA) has announced its decision to block the deal.

Recently, the UK regulator had dismissed Sony's concerns around Call of Duty exclusivity. However, they continued investigating the deal's impact on the cloud gaming industry. In order to aleviate these concerns, Microsoft made several cloud gaming deals with companies such as Boosteroid, Ubitus and Nvidia. The deals allowed these services to run Xbox PC games on their platforms. However, the CMA found several shortcomings in these deals.

Microsoft intends to appeal the decision

Microsoft has announced that it intends to appeal the CMA's decision to block the deal. Microsoft's Vice Chair and President put out a statement on Twitter regarding the deal.

"The CMA's decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom."

Brad Smith, vice chair and president, Microsoft

Additionally, Activision-Blizzard CEO Bobby Kotick has also stated that they're working with Microsoft on an appeal. In a Substack update addressing his employees, Kotick reassured them of the deal. "Alongside Microsoft, we can and will contest the decision, and we've already begun the work to appeal to the UK Competition Appeals Tribunal. We're confident in our case because the facts are on our side," he claimed.

Microsoft faces major delay in Activision-Blizzard acquisition

The CMA has thrown a wrench into Microsoft's plans to complete the deal by July 2023. This announcement and Microsoft's subsequent appeal will turn an already long-drawn affair into a longer one. While Microsoft is pulling several strings to get the deal across the table, they face an uphill battle with the CMA's opposition to the deal. While the CMA recently dismissed Sony's concerns around platform exclusivity, it has blocked the deal citing concerns around competition within the cloud gaming industry. Despite Microsoft's deals with multiple cloud-gaming providers, the CMA announced its decision to block the deal.

"The deals didn’t include agreements for Microsoft providing access to these games in rival multi-game subscription services or the ability for rivals “to offer versions of games on PC operating systems other than Windows.”"

Competitions and Markets Authority, UK

According to Martin Coleman, chair of the independent panel of experts conducting the investigation Microsoft's proposals "were not effective to remedy our concerns".

The deal now faces a block from both the UK's CMA and the FTC in the US. Microsoft now finds itself depending on the EU's greenlight to gain some momentum in the situation.