Meanwhile Twitter is on a compliance warning from the EU
Gameco Activision Blizzard says the UK is “closed for business” after the Competition and Markets Authority (CMA) blocked the proposed its proposed takeover by Microsoft.
This would have been the biggest acquisition in the history of the gaming sector, with a price tag of $68.7 billion (£55 billion) and Microsoft too is seriously put out. It says the CMA’s decision will “discourage innovation and investment in the UK”.
Activision Blizzard went further, saying it would “reassess our growth plans for the UK”.
Insufficient remedies
Earlier this month Microsoft pledged to make Call of Duty available on other platforms for at least a decade, thereby safeguarding competition in the console market. Sony, which owns PlayStation, was not reassured and said so.
Turns out the CMA too remained concerned that Microsoft would ultimately limit access to Activision Blizzard’s most popular titles, such as Line of Duty, to its own subscription service, Xbox Cloud Gaming and Xbox hardware platform.
Gaming is the biggest entertainment sector in the UK. Streamed games can be played on multiple non-specialist gaming devices from TVs to tablets, phones and computers rather than expensive, dedicated consoles with a library of content dictated by the platforms’ owners.
Martin Coleman, chaired panel of experts conducting the investigation into the proposed acquisition and noted, “Microsoft already enjoys a powerful position and head start over other competitors in cloud gaming and this deal would strengthen that advantage giving it the ability to undermine new and innovative competitors.”
Activision Blizzard has promised to “work aggressively with Microsoft to reverse this on appeal”.
A new era for UK competition regulation?
Last October, the CMA instructed Meta (Facebook’s parent company) to divest itself of the animated Gif search engine provider, Giphy, which it had acquired in 2020 for $400 million. Giphy is the largest supplier of animated gifs to social networks including Snapchat, TikTok and Twitter.
The regulator said its decision would “protect millions of social media users” and was upheld by the Competition Appeal Tribunal. This was seen as a landmark decision by the CMA, being the first time it had blocked a deal by a Silicon Valley giant. Meta said it would abide by the ruling.
The CMA’s argument was the deal would enable Meta to increase its market power by cutting off the supply of gifs to rival platforms, or enable Meta, for example, to demand more data about users in return for access to the gifs.
You have to wonder where its predecessors and the European Union’s competition authorities were when Facebook’s acquisition of WhatsApp was approved in 2014 and even Google’s purchase of DoubleClick in 2007. Of course, Facebook/Meta and Alphabet/Google were not the behemoths they are now but the writing was on the wall.
Twitter on a warning