British regulator Competitions and Markets Authority imposed additional restrictions on Microsoft's proposed purchase of Activision Blizzard. This development arrived shortly after the same agency blocked Microsoft's Activision Blizzard acquisition in late April.
The CMA originally rejected the deal on antitrust grounds, citing its potential to create a monopoly in the nascent cloud gaming space. Even though Nvidia GeForce Now and some other cloud gaming platforms spoke out against the CMA's decision, the regulator insisted that owning the Call of Duty maker would provide Microsoft with too much easily abused power in this rapidly growing industry.
In a subsequent interim order published on May 11, the CMA imposed additional restrictions on the proposed deal. While the previous ruling forbade Microsoft from acquiring Activision Blizzard, the regulator has now also taken steps to prevent an opposite scenario. Its latest order hence states that Activision Blizzard is forbidden from acquiring any kind of direct or indirect stake in Microsoft without prior approval from the CMA.
The directive itself is standard practice for the regulator and isn't expected to have a material impact on Microsoft and Activision Blizzard's consolidation efforts. Not least because Activision Blizzard hardly has the resources to acquire a significant portion of Microsoft, whose $2.3 trillion market cap dwarfs its own by a factor of almost 40. The interim order hinges on the CMA's rejection of the proposed acquisition surviving second-instance scrutiny. Both Microsoft and Activision Blizzard previously confirmed plans to appeal the regulator's decision to block their $69 billion deal. Due to the fairly unprecedented nature of the case, the timelines for their appeals remain unclear.
In the meantime, the transaction is still pending regulatory reviews in the European Union, Australia, China, and New Zealand. According to recent reports, the EU could approve Microsoft's Activision Blizzard acquisition as early as next week. None of the remaining regulatory probes are expected to result in opposition to the deal. On the other hand, the CMA wasn't expected to withhold its approval either, so it remains to be seen whether Microsoft is in for any more unpleasant surprises in the near future. The deal has so far been approved in Saudi Arabia, Brazil, Serbia, Chile, Japan, South Africa, and Ukraine, in that order.
Finally, the acquisition attempt is also facing stateside opposition, seeing how the Federal Trade Commission sued to block it on antitrust grounds back in December. But since Microsoft could theoretically complete the Activision Blizzard deal without the FTC approval, the CMA's rejection of the transaction remains its single biggest hurdle in pushing the purchase over the finish line.
Source: GamesIndustry