The UK CMA's objection to Microsoft's Activision deal focuses on the nascent cloud gaming market, a departure from regulators focusing on mature markets

UK regulators blocked Microsoft Corp.'s $69 billion purchase of Activision Blizzard Inc. over concerns it would harm competition in cloud gaming …

Bloomberg 2023-04-27 Cecilia D'Anastasio

Context & Ripple Effects

The CMA’s scrutiny began with a formal investigation into the proposed acquisition and later narrowed to concerns that Microsoft could withhold important games from rivals, even as Microsoft argued Sony remained the dominant player. By February, the regulator was asking for remedies after finding the deal could harm UK gaming competition without changes to the transaction.

This decision makes cloud gaming—not simply the established console market—the decisive competitive arena. That focus matters because it tests whether merger control can preserve options for a market still being built around game libraries, distribution access, and platform ownership.

First-order effects

The CMA’s block prevents Microsoft from completing its acquisition of Activision on the proposed terms in the UK; Microsoft has said it will appeal, while Activision remains outside Microsoft’s ownership pending resolution.
The immediate regulatory issue shifts from the value of the overall deal to control of Activision content in cloud gaming, following the CMA’s earlier concerns over withholding games from rivals.

Second-order effects

Microsoft and Activision must direct their response toward cloud-gaming access or rights arrangements, rather than relying solely on arguments about competition in the mature console market.
Cloud-gaming rivals and prospective distributors gain leverage in the remedies debate because continued access to major game content becomes the central condition for preserving competition.

Third-order effects

If this approach holds, large platform acquisitions may face intervention based on their ability to shape a nascent market’s future structure, not just their position in an already mature one.
That would make commitments on content access and distribution rights a more durable route to market access for smaller cloud-gaming services, though the eventual precedent depends on the appeal and any revised deal terms.

The trend: The case is part of a broader shift toward regulating platform consolidation through control of emerging distribution channels and the assets needed to make them competitive.

Discussion

@boosteroid_main @boosteroid_main on x
Boosteroid team and our users disagree with the CMA's decision against Microsoft's purchase of Activision. Our position on this issue is in line with that of Microsoft's president, Brad Smith. We hope for a quick resolution to this question. https://www.nytimes.com/...
@senninsage SenjutsuSage Hi-Fi Rush on x
Every last one of these reasons are so weak.. The CMA itself said BYOG cloud gaming services and MGS cloud gaming services were a direct competitor to cloud gaming as part of a multi-game subscription service. CMA has a credibility problem here. This is what they said in Feb http…
@senninsage SenjutsuSage Hi-Fi Rush on x
It's hilarious how the CMA went from thinking that Microsoft would make all Activision content, especially Call of Duty exclusive to Xbox Cloud Gaming services. They were concerned about availability strictly. Microsoft gives them countless deals guaranteeing that. They say? No.
@cecianasta Cecilia D'Anastasio on x
New (analysis): The great majority of people I've talked to today were shocked by the CMA's decision to block the Microsoft/Activision deal. Some questioned whether the CMA “gets” the cloud gaming market they say Microsoft could potentially dominate. https://www.bloomberg.com/...
@deeketweak Derek Strickland on x
This is really interesting. CMA finds that Activision would eventually bring its games to cloud services given that cloud is seen to be an important growth sector for the industry. https://twitter.com/...
@cmagovuk @cmagovuk on x
Cloud gaming can help existing and new #gamers access their favourite games without the need for an expensive #console or gaming PC in the future. 🎮
@cmagovuk @cmagovuk on x
📄 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, making it harder for other platforms to compete.
@zoidctf Zoid Kirsch on x
Stadia died so the UK based CMA could block the Microsoft Activision merger. I've never seen such an out of touch decision making. Cloud gaming!?
@cmagovuk @cmagovuk on x
The cloud #gaming market is growing rapidly, with the average number of UK cloud gamers tripling between 2021 and 2022. This growth is expected to continue. 📈 https://twitter.com/...
@projektxbox10 @projektxbox10 on x
From the cma report...even they admit that the cloud market is in its infancy and have no solid data....this is going to get obliterated by CAT https://twitter.com/...
@fosspatents Florian Mueller on x
This here is one way of looking at it. Whatever drove the CMA's decision, it's not based in fact or law. If the appeals court didn't overrule such an outrageous decision, the damage to the UK economy would be enormous. Who wants to be at the mercy of crazy regulatory overreach? h…
@jezcorden @jezcorden on x
CMA: “We did this to protect cloud providers.” Cloud providers: “uh .... ” https://twitter.com/...
@cmagovuk @cmagovuk on x
If Microsoft were to buy Activision, that position would only become stronger, reducing competition in cloud gaming, and affecting how the market develops. 📉
@peterovo5 PeterOvo on x
The CMA has said that if Microsoft make Activision Blizzard games exclusive to it's cloud platform it will make it difficult for others to compete If the CMA is concerned about exclusives, what are they doing about PlayStation, Nintendo & Xbox exclusives? Just ban exclusives http…
@tomwarren Tom Warren on x
I said back in September that CoD concerns were just noise and that the larger regulator concerns would be Microsoft's leverage of Windows and Azure for game distribution in the future. And here's the CMA today on Microsoft's recent cloud gaming deals: https://twitter.com/... htt…
@gameoverthirty @gameoverthirty on x
1/ This is another example of the UK CMA stating something to make it true, even though it's clearly not. #ActivisionBlizzard has stated they have no incentive to place their games on cloud for a multitude of reasons. They would only do so under MSFT (carrying the burden). https:…
@mikeisaac Rat King on x
i have no opinion on whether this deal should have been blocked or not but using “a potential monopoly in cloud gaming” as a stumbling block is funny who the fuck is cloud gaming??? https://www.bloomberg.com/...
@fosspatents Florian Mueller on x
@stephentotilo @michaelpachter Provisional Findings Report, para. 8.66: “we consider that there is a UK market for cloud gaming services, primarily because not every provider is present in the UK and there are price differences between different countries. From a supply-side pers…
@jezcorden @jezcorden on x
The UK CMA says that it wants to protect the “growing” cloud market, so why won't it let the major cloud players invest in its growth and viability? https://www.windowscentral.com/ ...
@wario64 @wario64 on x
CMA blocks Microsoft/Activision Blizzard acquisition “over concerns the deal would alter the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for UK gamers over the years to come.” https://www.gov.uk/... https://twitter.com/...
@hazzadorgamin @hazzadorgamin on x
Cloud streaming service Boosteroid Disagrees with the CMA decision to block Microsoft's Activision acquisition. Boosteroid signed a 10 year deal to bring PC Xbox/Actvision games to the platform, if the deal passed. https://twitter.com/...
@deeketweak Derek Strickland on x
It appears that multiple video games companies told the CMA that the merger would “seriously harm competition” and that Microsoft's proposed 10-year deals were not sufficient behavioral remedies. https://twitter.com/...
@s8mb @s8mb on x
The effect the CMA has on the wider British economy is becoming difficult to ignore. Decisions like this and blocking the FB/Giphy deal will undermine everything else we could try to do to make the UK a centre for tech startups and investment. https://www.gov.uk/...
@cecianasta Cecilia D'Anastasio on x
Analysts were surprised by the CMA's decision, with many saying regulators were comparing apples to oranges re: cloud gaming services. However, the CMA takes a wide view of what cloud gaming is: content, software, data centers, distribution, hardware. https://www.bloomberg.com/..…
Gameranx Ryan Parreno on x
MS President Brad Smith Calls CMA Decision “Bad For Britain”, PM Sunak's Office Responds
Pure Xbox Fraser Gilbert on x
Microsoft President Makes Headline News With ‘Furious’ Response To UK ActiBlizz Verdict
@stephentotilo Stephen Totilo on x
I spoke to Wedbush's @michaelpachter, who sees a lane forward for the deal in the UK: “carve out Game Pass UK and have no Activision content there while they comply with all of the other requests (making content available on consoles)” UK has to agree, which he says is “likely” h…
@matthewstoller Matt Stoller on x
“Microsoft has been in the United Kingdom for 40 years and we play a vital role, not just supporting businesses and non-profits but even defending the nation from cyber-security threats.” This is crazy, Microsoft as sovereign. https://www.gamesindustry.biz/ ...
@daveleebbg Dave Lee on x
Microsoft president Brad Smith calls CMA decision on Activision as “probably the darkest day in our four decades in Britain” https://www.bbc.com/...
@gossithedog Kevin Beaumont on x
This has become the top headline in the UK. The NHS alone is one of the world's biggest employers and E5 subscribers, let alone the rest of government here.. their licensing agreements have an end date. @BradSmi gambling big over Call of Duty. https://twitter.com/...
@hamilbug Isobel A Hamilton on x
Love the Microsoft/Activision Blizzard bigwigs talking like blocking the merger will send the UK into an economic hellpit. Pal, we're waaay ahead of you. https://www.bbc.com/...
@fosspatents Florian Mueller on x
There are only two possible ways forward here: Either the CAT will overrule @CMAgovUK and the CMA come to reason or the world will see that the rule of law is not intact in the UK, exposing it as a rogue jurisdiction where regulatory excess and incompetence are left unchecked. ht…
@tomwarren Tom Warren on x
Microsoft president Brad Smith on the CMA blocking the Activision Blizzard deal: “This decision, I have to say, is probably the darkest day in our four decades in Britain.” https://www.bbc.com/...
@the_chrisshaw Chris Shaw on x
Microsoft Boss: “There's a clear message here - the European Union is a more attractive place to start a business than the United Kingdom.” He added that the “English Channel has never seemed wider” in terms of the contrast between the UK and the EU. https://www.bbc.com/...

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