FFinally, the UK CMA (Competition and Markets Authority) blocked Microsoft’s purchase of Activision in what it claims is one of the industry’s longest and toughest stories video games for a long time. As they expressed in an official statement, they decided to prevent the purchase “for fear that the agreement could change the future of the video game market due to the rapid growth of cloud games”.
So they consider that Microsoft’s decision could break into the market too significantly and disrupt free competition due to the company’s potential in cloud gaming services. They claim that Microsoft’s position in this market is very powerful as it represents “approximately between 60 and 70% of global cloud services”, having this and many other strengths.
With that in mind, they think the Activision acquisition would put it in too big of a position. “Allowing Microsoft to take such a strong position in the cloud gaming market even as it begins to grow rapidly could undermine the innovation that is crucial to developing these opportunities.”they indicate in the official press release that they published when deciding on their resolution.
CMA statements
On top of all this, although the CMA seems to have positively valued the moves made by Microsoft, considers that the alternatives presented by the company are insufficient to avoid this situation of power. In this way, they express that “Microsoft’s proposal contained a series of significant shortcomings related to the growing nature of cloud gaming services”.
As they state, not only will they not cover enough business models with the alternatives they offer, but they understand that it’s not open to other vendors who want to offer cloud versions of games in services other than Windows. Unfortunately, the subject is much more complex than thatbecause retrieving all the details that have been provided over the past few months is quite confusing.
“Microsoft has a powerful position and advantage over other competitors in cloud gaming and this deal will reinforce that advantage by giving it the ability to undermine the competition. Cloud gaming needs a free and competitive market to drive innovation and free choice,” they explain in their statement.. Therefore, one of the big points against Xbox when it comes to adding Activision to its ranks is its dominance in the cloud gaming market, according to the CMA.
Is the purchase so complicated?
Without going into my own assessments, It is clear that this is an exceptionally complex subject in which it is very difficult to agree on all points. There are those who consider that the acquisition of Activision, with IPs like Call of Duty, Overwatch or Diablo, for example, would strengthen Microsoft too much, while others consider that the non-exclusivity of these games would not affect the situation of so many very diverse companies that are ‘confronted’ on the market.
What is clear is that it does not look like this will be the last we hear on the subject, Well, it would be very strange if Microsoft didn’t send a counter-argument to the points made by the CMA. Especially since in other international organizations I know that the purchase has been validated and it has been considered that, although it is clear that it will significantly increase the value of the brand, it will not affect not consumers or the market so negatively because of the great position it occupies, occupied by other rival companies.