Microsoft has officially filed an appeal against the UK competition regulator's decision to block its proposed acquisition of Activision Blizzard, the maker of popular video games such as Call of Duty and World of Warcraft.
The Competition and Markets Authority (CMA) announced in April that it was preventing the $69 billion deal due to concerns about its impact on the nascent cloud gaming market, which allows users to stream games from remote servers to their devices.
The CMA said that Microsoft already had a powerful position and head start over other competitors in cloud gaming and that the deal would strengthen that advantage, giving it the ability to undermine new and innovative competitors.
Microsoft argued that the CMA's decision was “unreasonable” and “discourages technology innovation and investment” in the UK. The US tech giant also claimed that consumers and competition would not be harmed by the deal, which had been approved by 37 other countries.
The European Commission (EC) accepted Microsoft's concessions to offer free licenses over a 10-year period allowing European consumers who purchase Activision PC and console games to stream them on other cloud gaming services.
Microsoft's appeal will be heard by the Competition Appeal Tribunal (CAT), an independent judicial body that deals with cases involving competition law.
Getting the Deal Over the Line
So far, major regulators have approved Microsoft's Activision merger. The acquisition has been given a green light in the European Union, Japan, and China. However, some market regulators are opposing the transaction.
The deal also faces significant hurdles in the US, where the Federal Trade Commission (FTC) filed a lawsuit in December to block the deal on antitrust grounds. The FTC argued that the deal would eliminate a major rival to Microsoft in the gaming industry and reduce innovation and consumer choice. A trial has been set for later this year.
The acquisition of Activision Blizzard would be Microsoft's largest-ever deal and would make it the world's second-largest game maker behind Nintendo. Activision Blizzard has more than 400 million monthly active players across its franchises, which also include Call of Duty, Candy Crush, Hearthstone, World of Warcraft, and Overwatch.
Microsoft has made some promises to ensure that Call of Duty remains accessible on different platforms for the next 10 years. It has signed deals with Nintendo, GeForce Now, Boosteroid, Ubitus, EE in the UK, and others. It has also offered a similar deal to Sony, but Sony has opposed the merger and accused Microsoft of trying to ruin Call of Duty on PlayStation.
The result of the FTC lawsuit could determine the fate of the deal. If the FTC gives up and approves the merger, and with the EC already on board, Microsoft might have a better chance of convincing the CMA or winning the appeal.
If you want to know more about this deal, you can follow our Microsoft Activision Blizzard merger timeline stories. You can also visit Microsoft's official hub.