The UK’s Competition and Markets Authority (CMA) is blocking Microsoft’s proposed $69 billion acquisition of the video game company Activision Blizzard, in a potentially fatal blow for the gaming industry’s biggest ever deal.
Thomas Jungbauer is a professor of strategy and business economics at Cornell University. He says the move puts a significant dent in Microsoft’s plans to take a unanimous leadership in the cloud-gaming market.
“Since the Federal Trade Commission (FTC) voiced its intent to stop the acquisition, Microsoft has allegedly been entertaining the idea of going forward with the deal anyway, and fight a possible injunction filed by the FTC after completion of the deal. This strategy, however, appeared significantly more promising if Microsoft could have pointed to favorable decisions by the CMA and the European Commission (EC).
“Taking the FTC’s relatively weak stance on antitrust relative to its European counterparts into account, Microsoft’s strategy now seems somewhat short-sighted. Most analysts had predicted the acquisition to pass the ruling of both CMA and EC due to licensing deals of Activision Blizzard games promised by Microsoft for its competitors.
“Maybe these authorities concur with the FTC though, that Microsoft would still gain an unfair advantage, perhaps in terms of pricing, development or platform compatibility, even if it were to license its games via other platforms. Moreover, even licensing deals are not set in stone, and it is unclear how they, for instance, apply to new developments on new platform generations.”