Regulators recently stopped Microsoft’s plan to buy the gaming company, Activision Blizzard. This could mean that gamers will have more games to choose from, say experts.
The UK’s antitrust office said that the deal would make it harder for people to play games online. It’s part of the growing worry that big tech deals could hurt people all over the world.
“Even in the United States, the Federal Trade Commission approved an administrative complaint against the proposed merger between Microsoft Corp. and Activision Blizzard, Inc., a video game developer,” Anat Alon-Beck, a business law professor at Case Western Reserve University, told Lifewire in an email interview.
“Don’t forget that Microsoft sells the Xbox gaming system and has a subscription service for video games called Xbox Game Pass, as well as a cloud-based streaming service for video games. If the deal goes through, Microsoft will be able to get rid of competitors to its Xbox gaming consoles and its rapidly growing subscription and cloud-gaming company.
Competition in Cloud Gaming
In January 2022, Microsoft agreed to pay $68.7 billion to buy Activision, which makes some of the most popular video games in the world. The UK government looked into the merger and found that it would make Microsoft stronger in cloud games, making it harder for other companies to compete in this growing market.
In a news release, the UK government said, “Microsoft already has a strong position and a head start over other competitors in cloud gaming. This deal would strengthen that advantage and give it the power to hurt new and innovative competitors.”
The Competition and Markets Authority (CMA) said that Microsoft’s promise to give leading cloud game platforms access to Activision’s multibillion-dollar Call of Duty franchise would not solve its problems.
The CMA is the first of three officials to make a decision about the deal, which also needs to be approved by the US and the EU. The UK group said it didn’t think the deal would hurt competition in the market for computer games.
“Today’s CMA report is a major setback for the UK’s plans to be a tech hub,” Activision Blizzard’s EVP of Corporate Affairs and CCO, Lulu Cheng Meservey, said in a Tweet. “We will work with Microsoft to reverse it on appeal.” “This report is also bad for the people of the UK, whose economic prospects are getting worse, and we will need to rethink our growth plan in the UK. Even with all its talk, big and small companies around the world will notice that the UK is closed for business.
Brad Smith, vice chairman and president of Microsoft, said that the company was still committed to the deal and had already signed contracts to make Activision Blizzard’s games available on 150 million more devices.
The deal, which was announced in January 2022, is the biggest deal in game history. It would give Microsoft more power in a market where Tencent and Sony are the leaders.
Competition in Cloud Gaming for the Win
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Some people said that the move by UK officials would be good for gamers in the long run.
“Microsoft has an enviable leadership position in AI gaming and the future of cloud services. For regulators to recognize that market power and encourage more competition, it’s good for startups, innovation, and venture capital,” said Paul Hsu, CEO of Decasonic, a venture fund with a history in game-building.
Hsu said that the antitrust move could have effects outside of games as well.
“This action is definitely about cloud gaming. It also shows that the regulator wants to keep markets free and competitive in areas like Web3 cloud, gaming, and AI,” he said. “We think this is good for free market competition. We think there are newcomers who can use these disruptive technologies to make gaming IP without distorting the market.”
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