Microsoft’s plan to acquire Activision Blizzard for $69 billion has hit a snag after the Competition and Markets Authority (CMA) in the UK blocked the deal over concerns that it would hinder cloud gaming. This move by the regulator came as a shock since they had already resolved their concerns about the consoles market. However, the deal is not necessarily dead, as Microsoft has said that it remains fully committed and will appeal the decision. In this article, we’ll take a closer look at the situation and explore what might happen next.
Understanding the UK Ban
The CMA’s decision to block Microsoft’s acquisition of Activision Blizzard came as a result of concerns that the deal would lead to a reduction in competition in the cloud gaming market. The regulator argued that Microsoft’s acquisition of Activision would give it too much control over the cloud gaming market, which would make it difficult for other companies to compete.
Is the Deal Dead?
Microsoft has said that it remains committed to the deal and will appeal the decision. However, the process of appealing to Britain’s Competition Appeal Tribunal (CAT) could take many months, and there is no guarantee that Microsoft will be successful in its appeal.
How Does the Appeal Process Work?
If Microsoft decides to appeal the decision, it will do so through the CAT. The CAT is an independent judicial body that will only examine the CMA’s decision-making process, not the merits of the merger.
Microsoft has until May 24 to appeal the decision, and a decision may take many months. The CAT aims to deal with “straightforward” cases in under nine months, but Microsoft/Activision is anything but straightforward.
What Happens if Microsoft Wins?
If Microsoft wins the appeal, the Tribunal will return the case to the regulator for further review. Microsoft can then offer new concessions. However, the likelihood is that without a material change in circumstances or new evidence, the CMA is most likely to reach the same conclusion as it did the first time around.
What About Other Regulators?
European regulators will rule on the world’s biggest gaming deal by May 22. The U.S. Federal Trade Commission filed a complaint to block the deal, which Microsoft has indicated it will fight. If either of those blocks the deal, it could be game over.
What Has Happened to Other CMA Appeals?
Facebook-owner Meta appealed a 2021 decision by the CMA to block its acquisition of Giphy, seen as a test case for the British regulator’s resolve to take on “Big Tech”. Meta succeeded on a single procedural ground, with the decision otherwise upheld.
Global financial services company FNZ appealed a block on its 2019 merger with rival GBST. The regulator then “identified certain potential errors” in its investigation chaired by Martin Coleman, who also oversaw the Microsoft-Activision case.
The CAT sent the case back to be reconsidered, and the CMA agreed to accept a new remedy whereby FNZ could sell GBST and then buy parts of it back.
The Competition and Markets Authority’s decision to block Microsoft’s acquisition of Activision Blizzard has caused a stir in the gaming industry. While Microsoft has said that it remains committed to the deal and will appeal the decision, there is no guarantee that it will be successful. If Microsoft fails to overturn the UK ban, it will face an uphill battle as European regulators and the U.S. Federal Trade Commission have yet to rule on the deal. We will have to wait and see how this story unfolds in the coming months.