While the US has allowed the deal, the UK halts Microsoft from completing the sale.
Late last month, Microsoft announced its intention to acquire Activision Blizzard. The deal, valued at $69 billion, would have been Microsoft’s largest acquisition ever for one of the largest gaming companies in the world. However, the UK’s Competition and Markets Authority (CMA) has blocked the proposed deal, citing worries about competition within the videogame industry.
The CMA’s investigation found that the purchase would have reduced competitiveness in the gaming industry, specifically within the UK. The CMA found that Microsoft and Activision Blizzard are two of the firms within the gaming industry and that if the purchase were to go through, it would give Microsoft an even more outstanding market share. The investigation also determined that the acquisition would have given Microsoft a much higher position in the market for gaming consoles, given that Microsoft already has a significant presence by being the manufacturer of Xbox consoles. The acquisition of Activision Blizzard would have given Microsoft even greater control over the market. The CMA argued it would lead to higher prices less options for gamers.
In response to the denied purchase, Microsoft issued a statement expressing unhappiness and that they plan to appeal the ruling. For now, the company also stated that it would not be moving forward with the acquisition. The decision to block the purchase has been divisive by many within the gaming industry. Some believe it will help promote market competition, while those who criticized the decision argue that it will limit innovation and investment within gaming.
This effect on the marketing world will transpire well past the gaming industry; a similar example could be seen in the film industry under Disney’s acquisition of Fox in 2019. Many governments are very hesitant about a significant purchase of the studio, and it is something that marketers will have to keep in mind as they branch into new marketing and deal with acquisitions in all sorts of industries. Especially in the world of tech, and as the world benefits from globalization, businesses will have to consider the immense impact of government places on them, not just from a legal aspect but a perception aspect as well. If the decision is appealed, Microsoft will still have the stigma of negativity, given how divisive the deal was. Many relationships they had in the past may have changed, and their overall perception would be comparable to being a self-interested company such as their competitor Sony.
While the purchase of Blizzard is something that people on both sides are very divisive about, it is straightforward for those involved within the business side of the deal should take caution about the impact it will leave, not just for now, but in the future should something similar arise.
https://www.theverge.com/2023/4/26/23689252/microsoft-activision-blizzard-acquisition-blocked-uk-cma