UK government blocks Microsoft's proposed Activision purchase
In its long-awaited final report, the United Kingdom's Competition and Markets Authority said that Microsoft's proposed $69 billion acquisition of Activision would "result in a substantial lessening of competition" (SLC) in the supply of cloud-gaming services in the UK. As such, the regulator said that "the only effective remedy to this SLC and its adverse consequences is to prohibit the Merger."
The final report cites Microsoft's "strong position" in the cloud-gaming sector, where the company has an estimated 60 to 70 percent market share that makes it "already much stronger than its rivals." After purchasing Activision, the CMA says Microsoft "would find it commercially beneficial to make Activision's titles exclusive to its own cloud gaming service."
Microsoft has in recent months signed deals with Nvidia and smaller cloud-gaming providers in an attempt to "mak[e] even more clear to regulators that our acquisition of Activision Blizzard will make Call of Duty available on far more devices than before," as Microsoft Vice Chair and President Brad Smith said in a statement last month. But the CMA said these kinds of cloud-gaming deals—which Microsoft submitted to the CMA as a proposed remedy for any anticompetitive effects of the merger—were "limited to cloud gaming providers with specific business models" and thus not sufficient to address the regulator's concerns.
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Furious Microsoft Boss Says Confidence in UK 'Severely Shaken'
Microsoft's president has attacked the UK after it was blocked from buying US gaming firm Activision, saying the EU was a better place to start a business.
The move was "bad for Britain" and marked Microsoft's "darkest day" in its four decades of working in the country, Brad Smith told the BBC.
The regulator hit back saying it had to do what's best for people, "not merging firms with commercial interests".
The UK's move means the multi-billion dollar deal cannot go ahead globally.
Although US and EU regulators have yet to decide on whether to approve the deal, the UK regulator the Competition and Markets Authority (CMA) said: "Activision is intertwined through different markets - it can't be separated for the UK. So this decision blocks the deal from happening globally."
If it had been approved, the $68.7bn (£55bn) deal would have been the gaming industry's biggest ever takeover, and would have seen Microsoft get hold of massively popular games titles such as Call of Duty, Candy Crush and World of Warcraft.
Gabe Newell from Valve was quite right to fear about the future when he starting talking up Linux, and now it looks like Microsoft will be trying to push their own store even more.
Microsoft are moving to combine Windows 10 and Xbox One into one platform, and with that the Windows Store will become a bigger thing for them. This is something Gabe Newell of Valve feared, and it looks like it really is starting to become true. While there's nothing wrong with having universal games that work on W10 and XBone, making sure developers have to stick to their store is a problem.
The problem here, is that Microsoft are using their money and their exclusivity deals to keep certain games only on the Windows Store which locks out Steam in the process. There may not be too many doing it yet, but you can be sure over time Microsoft will sign more of these Windows 10 exclusive deals like they have with Quantum Break. Ars [Technica] actually put it quite well in their article here:
Unfortunately for Spencer, not only has the PC as gaming platform seen little improvement from Microsoft--bar DirectX 12--but the company's one-platform-fits-all approach simply isn't going to fly on PC. The PC community has its own rules and expectations. Forcing console-like restrictions on a group that values freedom was never going to end well. And now, with those people backed into a corner with Quantum Break--one of this year's most highly anticipated games--the backlash is only going to get bigger.
On this same theme (different kingpin), El Reg reports:
Microsoft Set to Purchase Activision Blizzard in $68.7 Billion Deal
Microsoft this morning announced plans to purchase gaming mega-publisher Activision Blizzard for a record-setting $68.7 billion. The move, when finalized, would bring franchises like Call of Duty, Overwatch, Diablo, World of Warcraft, Starcraft, and many more under the umbrella of the Xbox maker.
Today's announcement follows on Microsoft's $7.8 billion acquisition of Bethesda, announced just 15 months ago. After some initial confusion about what that meant for Bethesda's multiplatform titles, it has since become clear that most of Bethesda's biggest franchises, such as Elder Scrolls, will not be appearing on competing consoles such as the PlayStation 5.
In an encouraging sign for fans of Activision Blizzard's multiplatform games, Microsoft said in its announcement that "Activision Blizzard games are enjoyed on a variety of platforms and we plan to continue to support those communities moving forward." But Microsoft and Bethesda executives made similar positive noises about multiplatform titles before the deal was closed, only to shift towards Bethesda exclusivity after the deal was finalized.
Microsoft notes in its announcement that Activision Blizzard games would become a part of its Game Pass program, which currently enjoys 25 million subscribers. "With Activision Blizzard's nearly 400 million monthly active players in 190 countries and three billion-dollar franchises, this acquisition will make Game Pass one of the most compelling and diverse lineups of gaming content in the industry," the company said. "Upon close, Microsoft will have 30 internal game development studios, along with additional publishing and esports production capabilities."
Four U.S. senators have torpedoed Microsoft's $69 billion deal for Activision. They believe that the consolidation of the high-tech industry and corporate culture of gender misconduct at Activision could expand by the transaction. Democrat senators think that the planned takeover could undermine employees' calls for accountability over alleged gender and sexual harassment at the game developer.
Senators Elizabeth Warren (D), Bernie Sanders (I), Cory Booker (D), and Sheldon Whitehouse (D) are distraught with the fact that Robert Kotick, chief exec of Activision, will remain at the helm of the game company until closing in 2023. With the same head, the culture of misconduct will not go away, they assume. Another point they are concerned about is the consolidation of the high-tech industry in general and its impact on the workforce. Given their concerns, they wrote a letter to the Federal Trade Commission in an attempt to block the deal.
"We are deeply concerned about consolidation in the tech industry and its impact on workers," the letter obtained by the Wall Street Journal reads. "This lack of accountability, despite shareholders, employees, and the public calling for Kotick to be held responsible for the culture he created, would be an unacceptable result of the proposed Microsoft acquisition."
[...] The senators demand that FTC oppose the deal if it finds that it can worsen the negotiating position between workers and companies (in this case, Microsoft represents both entities).
The Federal Trade Commission has announced that it intends to sue to block Microsoft from acquiring Activision. Regulators are making the argument that Microsoft is doing this to use its control of game catalogs to make more and more games exclusive to the XBox in an effort to gain market share from its competitors, which is a violation of anti-trust law.
In a complaint issued today, the FTC pointed to Microsoft's record of acquiring and using valuable gaming content to suppress competition from rival consoles, including its acquisition of ZeniMax, parent company of Bethesda Softworks (a well-known game developer). Microsoft decided to make several of Bethesda's titles including Starfield and Redfall Microsoft exclusives despite assurances it had given to European antitrust authorities that it had no incentive to withhold games from rival consoles.
"Microsoft has already shown that it can and will withhold content from its gaming rivals," said Holly Vedova, Director of the FTC's Bureau of Competition. "Today we seek to stop Microsoft from gaining control over a leading independent game studio and using it to harm competition in multiple dynamic and fast-growing gaming markets."
Microsoft's Xbox Series S and Series X are one of only two types of high performance video game consoles. Importantly, Microsoft also offers a leading video game content subscription service called Xbox Game Pass, as well as a cutting-edge cloud-based video game streaming service, according to the complaint.
The US Federal Trade Commission (FTC) has thrown a monkey wrench into Microsoft's plan to acquire Activision. According to a scheduling order filed last week, the FTC's antitrust lawsuit hearing against the deal will not begin until August 2. This date is well past the contracted deadline of July 18, 2023, effectively triggering a breach in the agreement.
Technically, a failed closure would require Microsoft to pay Activision a $3 billion "breakup fee." However, since something outside of Microsoft's and Activision's control is causing the delay, it's more likely the two will have to start over and cut a new deal. What that means is as yet unclear.
The original agreement was to pay Activision $95 per share, a 40-percent premium over its then $65 market price. Since then, Activision's stock has traded in the mid-to-high 70s. It is currently priced at $76.90, theoretically putting Activision in a better bargaining position for a redeal.
However, Activision's public stance has been that it wants the merger just as much as Microsoft does. So it's within the realm of possibility that the two shake hands and say, "Same deal."
Microsoft and Activision agreed to the merger nearly a year ago. At the time, both companies expected to have the acquisition closed as early as November 2022. However, the record-breaking $68.7 billion buyout immediately got the attention of multiple regulators in several countries, including the FTC.