British regulators have blocked Microsoft’s $69 billion acquisition of Activision Blizzard. This is a significant setback for Microsoft as the company was preparing for this acquisition since last year. This decision was made by the Competition and Markets Authority (CMA) in the UK. The company also faces resistance from US regulators regarding the takeover of the video game company. If successful, the acquisition would have been the largest consumer tech deal in the past two decades. In 2000, AOL purchased Time Warner for billions of dollars.
Microsoft already enjoys a powerful position and head start over other competitors in cloud gaming and this deal would strengthen that advantage giving it the ability to undermine new and innovative competitors.
Martin Coleman, the chair of a panel that conducted an investigation for the CMA
The CMA, in their statement, claimed that Microsoft’s proposal “failed to effectively address the concerns in the cloud gaming sector.” This decision strengthens the ongoing efforts by the Federal Trade Commission (FTC) in the United States to prevent the acquisition. Additionally, it serves as a warning to large tech companies attempting to make significant deals during this time. As you may have noticed, there is growing governmental scrutiny over the potential abuse of power to harm rivals and consumers.
Microsoft Disappointed By UK’s Decision
The FTC has yet to issue an official statement on the matter. In response to the CMA’s decision, Microsoft announced its intention to appeal the decision. Brad Smith, Microsoft President, expressed disappointment in the decision.
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.
Brad Smith, President of Microsoft
The acquisition of Activision Blizzard would have significantly bolstered Microsoft’s cloud gaming portfolio. The company’s cloud gaming portfolio is a rapidly growing sector in the video game industry. With Activision Blizzard under its umbrella, Microsoft would have access to some of the most popular gaming franchises. Some of the most famous ones are Call of Duty, Overwatch, and World of Warcraft. Undoubtedly, this would have solidified Microsoft’s already dominant position in the cloud gaming market. Microsoft’s current leader in this sector is its Xbox Game Pass service.
Our CEO Bobby Kotick has shared an update on the CMA’s report regarding our deal with @Microsoft.
Read the full update here: https://t.co/ORphR7W8G0
— Activision Blizzard (@ATVI_AB) April 26, 2023
Regulators around the world have been increasingly vigilant in monitoring and scrutinizing large-scale mergers and acquisitions in the tech sector. The Microsoft-Activision deal is no exception. The decision by the UK regulators is yet another example of governments intervening in the market to preserve competition and protect consumer interests.
The future of Microsoft’s proposed acquisition now hangs in the balance, as the company faces ongoing opposition from both the UK and US regulators. The appeal process may take months, or even years, to conclude. While it is unclear how the situation will ultimately be resolved, the recent decision by the CMA has dealt a significant blow to Microsoft’s ambitions in the video game market.
Warren Buffett Purchased $5 Billion Worth Of Activision Shares Back in 2022
Warren Buffett, a billionaire stocks and forex trader, bought over $5 billion worth of shares from Activision Blizzard back in 2022. While this was seen as a move ahead of Microsoft’s acquisition, Buffett slowly began selling his Activision stock. Most people believe that Buffett planned to use these purchases in order to flip the stock once Microsoft acquired it. Now that UK regulators blocked the acquisition, nothing can be said about Buffett’s stance on the company.