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British regulator blocks Microsoft and Activision Blizzard deal

Microsoft has run into new problems for its UK Activision deal
(photo: Microsoft)

The UK’s Competition and Markets Authority (CMA) has issued an interim order stating that Microsoft and Activision Blizzard will need “prior written consent” from the regulator before they can acquire each other’s stakes. Simply put, Microsoft can’t buy Activision stock and vice versa – this also applies to their subsidiaries.

The CAA decision comes two weeks after the regulator blocked Microsoft’s $68.7 billion deal to buy Activision Blizzard. A takeover would allow Microsoft to acquire gaming hits such as Call of Duty, Overwatch and World of Warcraft. The regulator is concerned that the deal will lead to less innovation and less choice for gamers in the cloud gaming business.

Microsoft and Activision criticized the decision and said they would appeal. An Activision representative commented, as quoted by the BBC, that the UK was “clearly closed for business”.

For the deal to go ahead, it must be approved by regulators in the UK, US and European Union – many other countries have already approved the acquisition. The CMA was the first regulator to make a decision in April. The EU is expected to make a decision in May.

The CMA’s interim order states that the authority “prevents proactive action” by Microsoft or Activision Blizzard. The document does not allow companies to acquire shares in each other, including their subsidiaries or businesses in which they have shares, for example:

  • Activision Blizzard Can’t Invest in Microsoft Xbox Game Studios;
  • Microsoft cannot invest in Activision Blizzard subsidiaries such as King, the studio that makes the popular mobile game Candy Crush Saga.

The order says companies must “immediately notify the CMA” if they have “any reason to suspect” that the order has been breached. A Microsoft spokesman told BBC News: “We remain firmly committed to this deal and look forward to taking our case to the Competition Tribunal.”

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