How the Microsoft Antitrust Ruling Could Be a Big Win for Gamers

Regulators recently blocked Microsoft's plan to purchase gaming company Activision Blizzard, and experts say the move could mean a wider variety of titles for gamers. 

The UK antitrust authority said the purchase would hurt competition in cloud gaming. It's part of growing concerns that big tech mergers could affect users worldwide. 

"Even here in the USA, The Federal Trade Commission authorized an administrative complaint against the proposed merger between Microsoft Corp. and Activision Blizzard, Inc., a video game developer," Anat Alon-Beck, a business law professor at Case Western Reserve University, told Lifewire in an email interview. "Don't forget that Microsoft sells the Xbox gaming console and also offers a video game subscription service called Xbox Game Pass, as well as a cloud-based video game streaming service. If the deal goes through, then Microsoft will be able to suppress competitors to its Xbox gaming consoles and its rapidly growing subscription and cloud-gaming business."

Competition in Cloud Gaming

Microsoft entered a $68.7 billion deal to buy Activision, one of the world's most popular video game publishers, in January 2022. The UK government launched a review and found that the merger could strengthen Microsoft in cloud gaming, stifling competition in this growing market.

"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," the UK government said in a news release. 

The Competition and Markets Authority (CMA) said that Microsoft's commitment to offering access to Activision's multi-billion dollar Call of Duty franchise to leading cloud gaming platforms would not effectively remedy its concerns.

The CMA is the first of the three regulators to rule on the deal, which also needs approval from the United States and the European Union. The UK body said it was not concerned that the deal would distort competition in the console gaming market.

Microsoft and Activision Blizzard struck out at the decision and said they would appeal. Activision Blizzard makes hit games like Call of Duty, World of Warcraft, and Candy Crush.

"The CMA's report today is a major setback for the UK's ambitions to be a tech hub, and we will work with Microsoft to reverse it on appeal," Lulu Cheng Meservey, the EVP of Corporate Affairs and CCO, Activision Blizzard, said in a Tweet. "This report is also a disservice to UK citizens, who face increasingly dire economic prospects, and we will need to reassess our growth strategy in the UK. Global innovators large and small will take note that—despite all its rhetoric—the UK is closed for business."

Brad Smith, vice chairman and president of Microsoft, said the company was still committed to the acquisition and had already signed contracts to make Activision Blizzard's games available on 150 million more devices.

The deal, announced in January 2022, is the biggest-ever deal in gaming and would boost Microsoft's firepower in a video gaming market led by Tencent and Sony.

Competition in Cloud Gaming for the Win

Observers said the move by UK regulators would ultimately benefit gamers. 

"Microsoft certainly has a leadership position that's enviable across AI gaming and the future of cloud services, for regulators to recognize that market power and to promote enhanced competition is positive for startups, innovation, and venture capital," former Zynga executive Paul Hsu, the CEO of Decasonic, a venture fund with a heritage in game-building, said in an email interview. 

The antitrust move could also reverberate beyond gaming, Hsu said.

"This action is certainly focused on cloud gaming; this also points to the regulator's desire to maintain free and competitive markets across other disruptive innovations, like Web3 cloud, gaming, and AI," he added. "We see this as positive for free market competition; we believe there are upstarts who can create gaming IP that leverages these disruptive technologies, free of distortion in the market."