Earlier today it seemed that Microsoft’s titanic deal to take over Activision Blizzard and all of its properties was about to go through. After the UK CMA and European regulators seemed to ease their concerns about the deal, it seemed that this would give the green team the extra firepower they needed to finally end the FTC’s blocking of the deal. Then, about two hours later, everything exploded in our faces as the UK CMA decided it would turn the table and block the deal.
We discussed the blocking of the acquisition in a recent news item, but the gist of it is that the CMA is sticking to its belief that Microsoft acquiring Activision Blizzard will distort cloud gaming competition and give Xbox an advantage over other platforms. This is even after Microsoft promised to bring games like Call of Duty to other platforms for up to a decade. The CMA also does not believe these problems can be easily solved by Microsoft selling the Call of Duty IP but keeping the rest from Activision Blizzard.
This is quite an unexpected move, to put it plainly. Many of Microsoft’s plans were based on the British CMA façade determination in favor of the deal. It would have proven that the body’s earlier concerns were unfounded, which in turn could have been used against the FTC lawsuit that blocked the deal. But we are where we are today. The British CMA has blocked the acquisition and so Microsoft will not meet that summer 2023 deadline to get the deal into a neat little bundle. So then the question becomes what happens after that?
Well, for Microsoft, it’s back to the drawing board. The owner of the Xbox platform has already said it plans to appeal the decision, but this will involve another lawsuit, which could take us well into 2024 before the deal is finalized if possible. This will mean much more of what we have already seen over the past year. Regulators will raise concerns about cloud gaming, exclusivity and more, and Microsoft will try to shut them down at every turn. Given the focus on cloud gaming within the CMA’s blockchain, we will likely see that issue take center stage for a while. Don’t expect Microsoft to come close to giving up on the Activision Blizzard acquisition either. It is very clear that it plans to fight to the bitter end to get its hands on the publisher Call of Duty, Overwatch and Diablo.
Smelling blood in the water, we can also imagine that Sony will redouble its efforts to prove why the deal should not go through. While it may have seemed like Sony’s cries that Microsoft was gaining dominance in the gaming market lately may have fallen on deaf ears, it is clear that the PlayStation owner’s efforts have at least partially bolstered the case against the deal. If Microsoft is the angel on one regulator’s shoulder telling it that the deal can only be good for gamers, Sony is the devil on the other shoulder spreading the story that Xbox will dominate the gaming world forever if it gets a hold of Activision Blizzard.
For Sony, Microsoft and the regulators involved, the legal battle continues, although this time it is being fought with a more precise focus on cloud gaming. What does this mean for all of us ordinary consumers? Well, at the basic level not much. All the projects Microsoft had planned after the acquisition went through will probably be put on hold, but we’re used to all kinds of delays in gaming at this point, so it doesn’t really make much tangible difference. If anything, things may look a little bleaker now that we know the deal isn’t going through, at least for a good while. This is especially the case if you’re a Nintendo fan, for example, who was looking forward to getting Call of Duty games on your console for years to come. If you’re a gamer who was a fan of the deal, this news will probably be a bit disappointing, but for now it’s probably best to keep your cool. This decision is unexpected and puts a huge damper on the deal, but it is by no means the end of the deal and we can expect a longer legal battle to simply unfold now.