Yesterday’s CMA decision to block the acquisition of Activision Blizzard by Microsoft was a curveball. While there were muted wonderings about whether the deal would go through a few months ago, recently the tide had changed. It was widely expected to be approved, and not only did that turn out to be false, but the reason it was blocked came as a huge surprise. A few people have since asked me why this happened, and at the time, I had to say it surprised me too. Now that I’ve read up on the decision, I’m here to answer the most commonly asked questions.

Why Did The UK Block Microsoft’s Activision Blizzard Buy-Out?

The simple answer is cloud gaming. As the CMA noted, it feared the deal would “alter the future of the fast-growing cloud gaming market, leading to reduced innovation and less choice for UK gamers over the years to come.”

Related: Microsoft Buying Activision Blizzard Is Bad

Between Windows and Game Pass, as well as its ownership of Azure, Microsoft owns up to 70 percent of the cloud gaming market, and the fear is that compounding that dominance with the major franchises Activision Blizzard owns would be anti-competitive in the future.

The CMA seems to be predicting with this decision that cloud gaming will become the primary form of gaming in years to come. That’s not the unanimous consensus, but apparently it is enough to block the acquisition, at least for now.

Activision Blizzard Xbox Series X
Via: Adobe Stock

Was Call Of Duty Involved In Microsoft Being Blocked From Buying Activision Blizzard?

Yes and no. Call of Duty itself was expected to be a sticking point, the series being too big to be under the ownership of a console manufacturer, leading to Xbox signing deals with Nintendo to bring it to Switch and trying to get Sony to sign-off on a decade-long contract of shared ownership.

In the end, Call of Duty was listed amongst several major properties Activision Blizzard owns, but not as an anti-competitive entity in itself, only as one of many big titles that would strengthen Xbox’s cloud gaming arsenal.

Call Of Duty: Advanced Warfare - Squad Members In Cutscene Inside Burning Base

Does The CMA’s Decision Mean The Activision Blizzard Deal Is Dead?

The first step is to appeal, which Microsoft has confirmed it will be doing as soon as it can. An appeal will involve changing nothing about the structure, but arguing why the decision should be changed by analysing the arguments. This has already begun, with Activision Blizzard and Microsoft pointing out that a post-Brexit Britain has signalled its ambitions to be a world leader in tech, and questioning the message this decision sends.

If the appeal fails, the companies will need to make changes. The cloud service being a sticking point is tough for Microsoft, because as it points out, it has agreed to keep the existing games listed in the CMA statement as cross-platform. While the CMA has agreed that the deal will not significantly damage the console market, the cloud market issue may not have a contingency plan. It may lead to a portion of Microsoft’s cloud tech being sold off.

Activision Blizzard Red Logo

What Does Xbox Have To Do Now To Get The Deal Through?

The appeal is a simple, if lengthy, process. It will analyse the CMA’s statements and from there try to build arguments that counter it and prove the deal will be good for the UK and will not damage competition in the area. There are three basic strategies. First, the argument that the UK needs to approve this deal for British jobs and the UK’s position as a tech hub - this was the immediate reaction.

Second, argue the CMA is incorrect, either in its understanding of the future of cloud gaming (which is entirely speculative) or in the damage Microsoft owning Activision Blizzard will do to that space. Gaming is at the intersection of technology and art, outsider to both, so there is some traction in the suggestion that the authorities just don’t know enough.

Thirdly, the reaction to failure in these endeavours would be to sell something off. Until the appeal goes through, we won’t know exactly what that might be.

Close-Up Of Xbox Series X Controller

Did The CMA Make The Right Decision To Block The Microsoft Activision Merger?

A lot of that is going to depend on your perspective. Personally, I don’t like the rapid increase in buyouts, and think they harm creativity and leave devs with fewer places to work. While Microsoft’s deal is the biggest in recent times, it’s not much different from other deals, so part of me wants the deal blocked because it’s a bad idea, but part of me knows the rules of the game have already been set. Companies will keep buying other companies, and Microsoft has done nothing wrong.

Taking away a personal viewpoint, I would say I disagree with the CMA’s conclusion. I think it is overstepping its bounds to suggest that the cloud market will soon become a dominant force in gaming, and is shortsighted in looking only at the current market - once cloud gaming becomes more viable, Nintendo and Sony (as well as likely Valve, Epic, and Apple) will grow their market share. I think it misunderstands how important cloud gaming is right now, but then Xbox has pushed this feature in advocating the Xbox Series X/S capabilities to players, and is a champion of always-online DRM, so it only has itself to blame.

Activision Blizzard

Is Microsoft’s Acquisition Being Blocked Good For PlayStation?

PlayStation ultimately doesn’t want this to happen, so it’s a positive that it has stumbled. However, of the many reasons Sony has put forward against it, cloud gaming has not been a central focus. Those in the Sony offices will be as surprised as those at Microsoft HQ. Because the CMA has already agreed that this deal won’t damage console competition, Sony is fairly powerless here. All it can do is watch and hope Xbox is forced into significantly weakening Activision Blizzard’s arsenal.

What Does The Activision Blizzard Buy-Out Mean For Players?

Right now, nothing is changing. Microsoft has stated repeatedly that existing properties like Overwatch and Call of Duty will remain cross-platform. However, given it bought Bethesda and made Starfield exclusive, the long-view will be to have some more Xbox games. Then again, the money from WoW subs and Overwatch and CoD microtransactions is also a healthy slice of income, so there may not be a rush. All things considered, it’s extremely unlikely the deal will be closed before 2024 now, so that could mean internal delays on titles we don’t even know about.

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