The UK's Competition and Markets Authority (CMA) has thwarted Microsoft's ambitious $68.7 billion takeover bid for Activision Blizzard. Microsoft plans to appeal the decision, but the setback is a significant blow to its acquisition plans. If the appeal fails, it could prevent Microsoft from closing the deal and realising its ambitious acquisition targets.

In January 2022, Microsoft entered into an agreement to acquire Activision, one of the world's most popular video game publishers, in a deal worth $68.7 billion. The deal is the largest video game acquisition in history and the largest acquisition Microsoft has ever made. If completed, it would make Microsoft the third largest gaming company in the world by revenue, behind Tencent and Sony.

Regulator CMA has expressed concerns about the potential consequences of the acquisition, in particular the reduced innovation and limited opportunities for players in the fast-growing cloud gaming sector. The CMA estimates that Microsoft already controls approximately 60-70% of the global market for cloud gaming services. If the acquisition of Activision Blizzard were to go through, it would give Microsoft significant leverage with control over popular franchises such as Call of Duty, Overwatch and World of Warcraft, and further cement its dominance in the cloud gaming industry.

"As a result of industry consolidation, we have seen an increasing number of interventions by antitrust authorities in recent years to prevent global giants from gaining market dominance."

-Jan Brabec, Partner – Financial Advisory