Furious row over Microsoft’s proposed £55bn takeover of video game maker Activision – firm behind Call of Duty – set to intensify as legal battle looms
Battle: Activision has attacked the CMA’s findings and said it shows ‘the UK is clearly closed for business’
The furious row over Microsoft’s proposed £55 billion takeover of video game maker Activision Blizzard – the firm behind Call of Duty – is set to intensify as a bitter legal battle looms.
The Competition and Markets Authority is standing by its decision to block the landmark deal after it carried out one of its most thorough investigations ever.
A team of about 30 staff poured over three million documents to scrutinise the takeover, which is now on the brink of collapse.
The CMA released a 415-page report on Microsoft’s anticipated acquisition last week, concluding that it would lead to ‘reduced innovation and less choice for UK gamers over the years to come’.
The watchdog was particularly worried that Microsoft could gain a stranglehold over cloud gaming – the streaming of games over the internet.
The CMA’s decision followed a year of in-depth engagement with the two companies, which included exchanging thousands of emails, interviewing senior executives and combing over sensitive internal documents.
Activision has attacked the CMA’s findings and said it shows ‘the UK is clearly closed for business’.
But industry sources have argued that the proposed merger between Microsoft and Activision – two US-based companies – would do little to boost investment in the UK.
Activision – whose games include World of Warcraft and Candy Crush Saga – generates just over £700 million of its £6 .3billion turnover in Britain.
This is the first time the CMA has blocked a Microsoft-related merger, and a rare instance of the watchdog baring its teeth.
Sarah Cardell, chief executive of the CMA, said: ‘This decision is entirely consistent with the Government’s investment ambition and makes sure that tech markets are open to competition.’
Activision and Microsoft are both expected to appeal against the decision within the next month.
Microsoft said: ‘This decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works.’ Activision Blizzard was contacted for comment.
Activision boss fights for £300m payout
Payout: Bobby Kotick holds almost 4m shares in Activision Blizzard
The long-standing chief executive of Activision Blizzard is in line for a £300 million payout on his shares if the controversial sale of his firm to Microsoft goes ahead.
Bobby Kotick holds almost 4 million shares in the US game maker, which were accumulated over 30 years.
He has been fuming since the Competition and Markets Authority blocked the proposed £55 billion deal last week.
He suggested the UK watchdog has been used ‘as a tool’ by the Federal Trade Commission in the US and said the latest decision is ‘far from the final word’.
Regulators in the UK, US and EU must approve the deal before it can proceed. The CMA was the first watchdog to announce its ruling.
Activision added that Kotick will not receive a separate ‘special bonus’ if the deal closes.