Microsoft, Activision Respond to Blocked Acquisition

In a big blow against Microsoft’s potential acquisition of Activision Blizzard, the UK’s Competition and Markets Authority said this week that it would block the deal while reasoning that this proposed acquisition would “harm” gamers in the UK and would substantially lessen the competition between Microsoft and its competitors. Microsoft and Activision Blizzard, as expected, are not in agreement with that verdict and have committed to continuing a push towards the acquisition. Both companies issued statements indicating as much this week with Microsoft president Brad Smith and Activision Blizzard CEO Bobby Kotick both responding to the CMA’s decision.

Kotick addressed the situation in a prepared statement shared by Activision Blizzard following the CMA’s announcement. He said the CMA’s stance on the matter was “far from the final word on this deal” and that denying this acquisition “would stifle investment, competition, and job creation throughout the UK gaming industry.”

“This merger is a complex process, and I know I’m not the only one frustrated by the hurdles and delays,” Kotick said. “We’re accustomed to a company culture that moves quickly to accomplish big goals, so it’s tough when we can’t close things out at our usual energetic pace. We’ll keep pressing our case, because we know that this merger will benefit our employees, the broader UK tech workforce, and players around the world.”

Smith offered similar reassurances to those who wish for this deal to go through. He echoed similar frustrations expressed by some industry leaders and fans that suggested the regulators involved in these decisions did not fully understand the gaming market and cloud technology.

“We remain fully committed to this acquisition and will appeal,” he said. “The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom. We have already signed contracts to make Activision Blizzard’s popular games available on 150 million more devices, and we remain committed to reinforcing these agreements through regulatory remedies. We’re especially disappointed that after lengthy deliberations, this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works.”

The contracts referenced by Smith refer to numerous agreements Microsoft signed recently with companies big and small — big as in Nintendo, in some cases — to bring Activision Blizzard games to various platforms be they consoles or cloud-based technologies. These deals were announced quite publicly with Microsoft laying the groundwork for those plans already ahead of the deal being finalized.

Kotick was correct in saying the CMA’s ruling wasn’t the final word on the acquisition, though it’s a significant setback regardless that’ll delay progress for both parties. Other regulators have not yet announced anything as definitive as the CMA’s verdict.