Activision and Microsoft to appeal after CMA blocks takeover

Activision has said it will “work aggressively” with Microsoft to overturn the U.K. competition regulator’s decision to block Microsoft’s proposed takeover of the game developer.

Microsoft and Activision were confident of approval after agreeing remedies to address concerns raised by the Competition and Markets Authority (CMA). But the CMA said on Wednesday that the proposed solution “failed to effectively address the concerns in the cloud gaming sector.”

It said: “The deal would reinforce Microsoft’s advantage in the market by giving it control over important gaming content such as Call of Duty, Overwatch, and World of Warcraft.”

A spokesperson for Activision said the CMA’s report “contradicts the ambitions of the U.K. to become an attractive country to build technology businesses... The report’s conclusions are a disservice to U.K. citizens, who face increasingly dire economic prospects. We will reassess our growth plans for the U.K.

“Global innovators large and small will take note that — despite all its rhetoric — the U.K. is clearly closed for business.”

Microsoft submitted proposals earlier this year to address some of these concerns but the CMA said they contained “a number of significant shortcomings” as they only applied to a defined set of Activision games.

Martin Coleman, chair of the independent panel of experts conducting the investigation, said: “Microsoft already enjoys a powerful position and head start over other competitors in cloud gaming and this deal would strengthen that advantage giving it the ability to undermine new and innovative competitors.”

Brad Smith, vice chair and president of Microsoft said the company would appeal and remained “fully committed” to the deal.

“The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom.” He said the decision showed a “flawed understanding” of the market.

Microsoft agreed to buy Activision in a $69 billion deal in January 2022, prompting investigations in the U.K., EU and U.S.