British market regulator prohibits Activision takeover by Microsoft
Microsoft wants to take over its competitor Activision and has now experienced a surprising setback. The British market regulator CMA does not approve the takeover. Microsoft wants to take action against the decision.
69 billion dollars for Activision
The takeover of Activision by Microsoft already seemed to be in the bag. The two parties had already agreed on a takeover fee of $69 billion. But now the British market regulator prohibited the deal. It wants to prevent Microsoft from expanding its supremacy in the cloud gaming market into a dominant position. According to the CMA, Microsoft already has a market share of 60 to 70 percent. Acquiring the competition would expand this significantly. In addition, according to the CMA, it would be easy for Microsoft to offer many top games exclusively on its own platform after the takeover – and thus push the remaining competition out of the market.
Microsoft itself had actually taken precautions in this regard and concluded agreements with remaining competitors in the cloud gaming market. Microsoft’s games were to remain available from the competition for a period of ten years. This was obviously not enough for the CMA.
The ruling thus fits in with a general directional decision by British politicians, who want to take stronger action than before against the formation of monopolies and also prevent them with drastic penalties. It hopes that this will lead to price reductions.
Microsoft wants to take action against decision
Microsoft, meanwhile, does not want to accept the decision. The company, which according to a report in the New York Post had firmly expected to receive approval,referred in this context to the fact that the CMA’s decision shows a lack of understanding of how the cloud gaming market works: “We remain fully convinced of the acquisition and will appeal. The CMA’s decision rejects a pragmatic way to address competitive concerns and discourages technological innovation and investment in the UK. We have already signed agreements that will ensure Acitivision Blizzard’s popular games will be available on 150 million more devices, and we remain committed to enforcing these agreements through regulatory action. We are particularly disappointed that, after much deliberation, this decision appears to reflect a misunderstanding of the market and how the relevant cloud technology works.”
Further developments remain to be seen. Also interesting in this regard is the fact that the EU has already indicated it may not approve the purchase. The USA, whose supervisory authority must also give its approval, is also affected.
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