UK blocks Microsoft’s $69 billion acquisition of Activision, citing cloud gaming concerns

Britain’s antitrust regulator announced on Wednesday that it would block Microsoft’s attempt to acquire the creator of “Call of Duty” Activision Blizzard for $69 billion, citing concerns about potential competition constraints in cloud gaming.

The move dealt a surprise blow to the gaming industry’s largest-ever transaction. The regulator claimed that Microsoft’s proposal to provide access to Activision’s lucrative “Call of Duty” franchise to major cloud gaming platforms would not adequately address its concerns, Reuters reported.

The news comes a little over a year after Redmond-based Microsoft announced it was buying video game giant Activision Blizzard in a $68.7 billion all-cash deal. Microsoft said at the time that the acquisition would bolster Microsoft’s Game Pass portfolio with plans to launch Activision Blizzard games into Game Pass, which has reached a new milestone of over 25 million subscribers.

Despite the decision, Microsoft stated that it still fully intends to pursue the acquisition and plans to appeal the decision. Meanwhile, Activision declared that it would collaborate closely with Microsoft in a concerted effort to overturn the ruling.

“We will reassess our growth plans for the UK,” Activision said. “Global innovators large and small will take note that – despite all its rhetoric – the UK is clearly closed for business.”

Activision, which is known for popular games such as “Call of Duty” and “Tony Hawk’s Pro Skater,” has been mired in controversy for the last several months following reports of sexual misconduct and harassment among the company’s executives. On Monday, Activision said it fired dozens of executives after an investigation.

Microsoft has gotten more aggressive with gaming over the past several years. It bought “Minecraft” maker Mojang for $2.5 billion in 2014. And in 2020, Microsoft completed a $7.5 billion acquisition of game maker Bethesda.

Mobile is the largest segment in gaming, with nearly 95% of all players globally enjoying games on mobile. Through great teams and great technology, Microsoft and Activision Blizzard will empower players to enjoy the most-immersive franchises, like “Halo” and “Warcraft,” virtually anywhere they want. And with games like “Candy Crush,” Activision Blizzard´s mobile business represents a significant presence and opportunity for Microsoft in this fast-growing segment.

With Activision Blizzard’s nearly 400 million monthly active players in 190 countries and three billion-dollar franchises, this acquisition will make Game Pass one of the most compelling and diverse lineups of gaming content in the industry. Upon close, Microsoft will have 30 internal game development studios, along with additional publishing and esports production capabilities.