The Microsoft Activision merger has hit a significant roadblock today, as the UK’s Competition and Markets Authority (CMA) vetoed the $69 billion merger.
Despite a report just last month that detailed the UK CMA essentially siding with Microsoft over their planned Activision Blizzard acquisition, the CMA has decided to veto the merger, citing its initial concerns over “less innovation for UK gamers,” Bloomberg reports.
Although the CMA has vetoed the acquisition, Vice Chair and President of Microsoft, Brad Smith, said “We remain fully committed to this acquisition and will appeal,” with “The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the UK” regarding the decision. Activision CEO Bobby Kotick echoed these sentiments with, “We’ve already begun the work to appeal to the UK Competition Appeals Tribunal. We’re confident in our case because the facts are on our side, this deal is good for competition,” in a company-wide note to Activision employees.
The initial concerns the CMA has had with the merger were voiced back in September 2022, when Senior Director of Mergers at the CMA, Sorcha O’Carroll, said, “We are concerned that Microsoft could use its control over popular games like Call of Duty and World of Warcraft post-merger to harm rivals,” suggesting the merger could derail potential competition in the space.
While Microsoft has said they will appeal, a merger arbitrage strategist at TD Cowen, Aaron Glick, told Bloomberg, “There has never been a successful appeal in the UK on an antitrust decision,” with “There does not appear to be a path forward for Microsoft” regarding the future of the deal.
While the European Commission still has to give their final judgment on the merger on May 22, readers trying to catch up on this now over-a-year saga can check out the other CGMagazine Microsoft Activision merger articles for more context.