The CMA Responds To The EU Approving Microsoft-Activision Merger

After the news of the European Commission approving Microsoft’s $69 billion acquisition of Activision-Blizzard broke out, CMA was quick to issue a statement showing its opposition to the decision that has been made. CMA seems to be mad about how this situation has unfolded and called the EU “wrong” for approving this acquisition. The statement seems to suggest that the approval completely disregards the concerns shared by the CMA.

The UK, US and European competition authorities are unanimous that this merger would harm competition in cloud gaming.

The CMA concluded that cloud gaming needs to continue as a free, competitive market to drive innovation and choice in this rapidly evolving sector.

[2/5]

— Competition & Markets Authority (@CMAgovUK) May 15, 2023

CMA’s response states, “Microsoft’s proposals, accepted by the European Commission today, would allow Microsoft to set the terms and conditions for this market for the next 10 years.” In addition, CMA believes that Microsoft seeks to replace the free, open, and highly competitive market with a system bound by regulatory oversight. The system would govern the games they offer, the platforms they support, and the terms of sale.

CMA continued its statement by saying, “This is one of the reasons the CMA’s independent panel group rejected Microsoft’s proposals and prevented this deal.” As a result, it believes that the decision made by European Commission was “wrong,” as it didn’t consider the consequences that CMA took into account when it blocked the merger from happening for the next 10 years. 

Another big reason for CMA’s disapproval was Microsoft’s strength in cloud gaming and whether it would hurt the competition in the cloud gaming market. A concern that the European Commission also shared; however, it presented its remedy to ensure such an outcome was prevented from the beginning. So far, the deal has been approved in Saudi Arabia, Chile, Japan, Serbia, and South Africa.

EU’s approval of the acquisition is still one step in a ladder that Microsoft must climb. Nevertheless, the approval should make some things easier for Microsoft as it will pressure the UK government to reconsider its stance. It is also worth noting that since the European Commission has given a remedy to tackle the cloud gaming issue, CMA would certainly present its opinion on the strategy and whether it would work or not.