Microsoft's Activision Takeover Deal Was Blocked Due to Cloud Gaming, Not Consoles: Details

Microsoft failed to address concerns about the $69 billion (roughly Rs. 5,64,700 crore) deal raised by the UK's CMA regulator.

By Reuters | Updated: 27 April 2023 15:44 IST

Microsoft's Activision Takeover Deal Was Blocked Due to Cloud Gaming, Not Consoles: Details

Microsoft agreed to offer some Activision games on a number of cloud platforms

Highlights

CMA has been increasing proactive in taking on "Big Tech" since Brexit
Activision has not made its titles available on cloud services
Microsoft accounted for 60-70 percent of global cloud gaming services

For all the thunder about Xbox versus PlayStation, it was the nascent cloud market that led to Britain's surprise decision to block Microsoft's record Activision Blizzard takeover.

Microsoft has been working for months to satisfy concerns about the $69 billion (roughly Rs. 5,64,700 crore) deal raised by Britain's Competition and Markets Authority (CMA), which has been increasing proactive in taking on "Big Tech" since Brexit.

The ruling - which the US company has vowed to appeal — sets a precedent for the European Commission — due to issue its own verdict next month, and the US Federal trade Commission.

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Microsoft offered Sony a 10-year guarantee that new versions of Call of Duty— one of the most valuable franchises in gaming — would be available on PlayStation at the same time as on Xbox. Nintendo secured a similar deal.

That only answered the CMA's console concerns, leaving cloud gaming as the only remaining — and apparently lower — hurdle.

Defining cloud gaming is not simple.

Platform types and business models are still evolving, and several 'gaming as a platform' services have struggled to succeed, such as Google Stadia, according to a submission to the CMA's inquiry by UCL School of Management's Joost Rietveld.

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Transient Technology?

Activision has not made its titles available on cloud services, calling them a "transient technology", while Microsoft, which offers the Xbox Game Pass service, has said cloud gaming is "no more than a feature".

The CMA disagreed, saying that cloud was the most rapidly growing sector in gaming, while consoles were a mature market.

It said Microsoft already accounted for 60-70 percent of global cloud gaming services and had other trump cards: Xbox, the leading PC operating system Windows and cloud provider Azure.

Microsoft agreed to offer some Activision games on a number of cloud platforms, including Nvidia, Boosteroid and Ubitus.

But the CMA said Microsoft's remedies omitted rival subscription models — like a Netflix for games — or providers not using Windows on PCs.

"(Microsoft's) proposals were not effective to remedy our concerns and would have replaced competition with ineffective regulation in a new and dynamic market," it said.

Quilter Cheviot equity research analyst Ben Barringer said: "Ever since Brexit, the UK regulator has taken an actively harsh stance when it comes to anti-competitive behaviour.

"This stance is ultimately what has led to its decision to put a halt to the purchase, as it concluded that Microsoft already has a dominant position and 'cloud gaming needs a free, competitive market to drive innovation and choice'."

© Thomson Reuters 2023

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Call of Duty: Vanguard

REVIEW
KEY SPECS
NEWS

Good
Beautiful cinema
Well-written single-player campaign
Great characters; interesting addition of special abilities
Champion Hill game mode and combat pacing in multiplayer

Bad
Single-player campaign is way too short
Campaign difficulty skewed towards easy
Multiplayer visuals and pace make it more challenging
Zombies mode is not ready yet

Read detailed Activision Call of Duty: Vanguard review

Genre Shooter

Platform PlayStation 4 (PS4), PlayStation 5 (PS5), Xbox One, Xbox Series S/X, PC: Windows

Modes Single-player, Multiplayer

Series Call of Duty

PEGI Rating 18+

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