“The UK, US, and European competition authorities are unanimous that this merger would harm competition in cloud gaming,” a spokesperson for the CMA said. “The CMA concluded that cloud gaming needs to continue as a free, competitive market to drive innovation and choice in this rapidly evolving sector.”
It continued: “Microsoft’s proposals, accepted by the EC today, would allow Microsoft to set the terms and conditions for this market for the next ten years. They would replace a free, open and competitive market with one subject to ongoing regulation of the games Microsoft sells, the platforms to which it sells them, and the conditions of sale. This is one of the reasons the CMA's independent panel group rejected Microsoft's proposals and prevented this deal.”
It concluded: “While we recognise and respect that the EC is entitled to take a different view, the CMA stands by its decision.”
The next steps for Microsoft are tedious and will extend the timeline of this saga by many months. First, it may need to renegotiate the terms of the deal with Activision Blizzard, as the timeline for its expected closure is now likely to run far beyond its originally expected completion date of July. Should it proceed with that, it’ll then need to take its case to the Competition Appeal Tribunal, who will in turn determine whether the CMA needs to conduct a second review of the situation. Microsoft has already attempted to put political pressure on the UK government, arguing that the CMA’s decision proves the “European Union is a more attractive place to start a business than the UK”.
In the meantime, the United States’ Federal Trade Commission is still opposing the deal, and will need to be beaten in court. All of this, of course, means the story is set to run and run and run – potentially into 2024 and beyond. That is, of course, assuming Microsoft and Activision Blizzard do decide to persevere, and we should get more clarity on that later this summer.