Microsoft’s acquisition of Activision Blizzard has been blocked over cloud gaming concerns

Ben Schoon | Apr 26 2023 - 6:25 am PT

Microsoft has been battling it out to gain approval from the UK for its acquisition of Activision Blizzard for months now, but the final decision has not gone its way. The UK has officially blocked the Microsoft acquisition of Activision Blizzard, and the reason boils down to cloud gaming concerns.

Microsoft announced its deal to acquire Activision Blizzard in January 2022. The major deal was set to bring the company behind Call of Duty, Overwatch, World of Warcraft, and more within the same home as Xbox. The deal was quickly met with concerns over how this would affect the availability of games across other platforms, particularly with Call of Duty appearing on PlayStation specifically. It was the UK’s Competition and Markets Authority that held up the deal, spending more than a year now investigating the deal and its potential effects on the gaming market.

Just recently, it was looking like Microsoft would win approval for the Activision Blizzard deal, given that the UK CMA had dropped its concern over how the deal would affect the availability of Call of Duty on platforms outside of Xbox, especially as Microsoft had countless times reiterated its commitment to leaving the game open to other platforms.

Rather, cloud gaming was the concern of the CMA in a world following Activision Blizzard being a part of Microsoft, and that concern has now led to the CMA blocking the deal.

The UK CMA announced today that it would block the deal over concerns that it will “alter the future” of cloud gaming by reducing “innovation and… choice.” The CMA explains:

Microsoft has a strong position in cloud gaming services and the evidence available to the CMA showed that Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own cloud gaming service.

Microsoft already does have a commanding lead over cloud gaming across the globe. It was previously confirmed that, even when Google Stadia was still operating, Microsoft had upwards of 60-70% of the cloud gaming market. Interestingly, one of the reasons that the deal was blocked was the underlying platforms for these cloud gaming services. Microsoft has made several deals over the past few months with GeForce Now, Boosteroid, and others to provide Xbox and Activision Blizzard games to cloud gaming platforms, but none of them had a base outside of Windows.

But, of course, nothing is set in stone just yet. Microsoft has confirmed it intends to appeal the decision. Microsoft confirmed in a statement to The Verge saying:

We remain fully committed to this acquisition and will appeal. The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom. We have already signed contracts to make Activision Blizzard’s popular games available on 150 million more devices, and we remain committed to reinforcing these agreements through regulatory remedies. We’re especially disappointed that after lengthy deliberations, this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works.