UK competition regulator blocks Microsoft’s $68.7bn acquisition of Activision Blizzard

The Competition and Markets Authority (CMA) in the UK has blocked Microsoft’s planned $68.7bn takeover of Activision Blizzard.

The CMA stated that the acquisition would negatively impact the cloud gaming market and potentially reduce innovation and choice for UK gamers. Microsoft and Activision Blizzard are set to appeal the decision.

The CMA’s decision marks a major blow to Microsoft’s gaming ambitions, especially as it came after the regulatory body released a statement in March indicating that one of its three key concerns had been addressed by new evidence. Microsoft hit out at the CMA’s decision, stating that it appears to reflect a flawed understanding of the cloud gaming market.

The CMA is one of several competition watchdogs investigating the deal, and in December 2022, the US’ Federal Trade Commission (FTC) filed a lawsuit to block the merger. The European Commission, which is responsible for the EU’s investigation, extended the deadline for its investigation to May after Microsoft addressed some of its initial concerns. However, the deal has already received approval in some markets, including Brazil and Saudi Arabia.

Activision Blizzard is a major esports publisher and operates the franchised Overwatch League and Call of Duty League, as well as non-franchised leagues for games such as Hearthstone and StarCraft. Microsoft’s bid to acquire Activision Blizzard came at a challenging time for the publisher, which faced intense legal pressure and public backlash due to multiple lawsuits related to discrimination and sexual harassment.

Several major sponsors, such as Coca-Cola, Kellogg, and T-Mobile, dropped out of sponsoring Activision Blizzard’s franchised esports leagues in response to these lawsuits. In January, some franchise teams initiated a collective bargaining process against the Overwatch League, citing high costs and low revenue.