On January 18, 2022, Microsoft Corporation announced an agreement to acquire Activision Blizzard, Inc. for a purchase price of approximately $68.7 billion. The transaction would combine Microsoft's Xbox gaming platform, Windows operating system, and Azure cloud infrastructure with Activision's portfolio of AAA gaming franchises, most notably Call of Duty (CoD), World of Warcraft, and Overwatch. The UK CMA referred the merger for Phase 2 investigation on September 1, 2022, and delivered its Final Report on April 26, 2023.
The CMA examined whether Microsoft would have the ability and incentive to foreclose Sony's PlayStation from access to Call of Duty after the merger. Xbox and PlayStation compete closely, with Sony holding a significant share of global console revenues in 2021. Call of Duty is a major driver of console engagement. However, the Authority concluded that Microsoft would not find it financially beneficial to make CoD exclusive to Xbox, and that making CoD available on better terms on Xbox would not materially harm PlayStation's competitive position. On this basis, the CMA found no Substantial Lessening of Competition in console gaming services.
The CMA found that Microsoft already held a strong position in cloud gaming, with an estimated 60-70% global market share through Xbox Cloud Gaming. The merger would further consolidate Microsoft's advantages by combining Activision's titles (including CoD, World of Warcraft, and Overwatch) with Microsoft's existing Xbox content, Windows PC operating system, and Azure infrastructure. The Authority concluded Microsoft would have both the ability and commercial incentive to make Activision's content exclusive to its own cloud gaming service, reducing competition in a rapidly developing market. This constituted a Substantial Lessening of Competition.
Microsoft offered a behavioural remedy (the Microsoft Cloud Remedy) proposing 10-year licensing obligations to support specific cloud gaming providers. The CMA identified multiple shortcomings: limited scope excluding some business models, inability to support non-Windows operating systems such as Linux, high circumvention risk, and monitoring difficulty in a dynamic market. The Authority also evaluated Relevant Customer Benefits (RCBs) from Microsoft's agreements with Nintendo, NVIDIA, Boosteroid, Ubitus, and Game Pass additions — but found most did not qualify or were uncertain. The CMA concluded that only prohibition would effectively address the SLC, and on April 26, 2023 decided to prohibit the merger.
| Attribute | Value |
|---|---|
| Acquirer | Microsoft Corporation |
| Target | Activision Blizzard, Inc. |
| Deal Value | $68.7 billion |
| Announcement Date | January 18, 2022 |
| CMA Referral to Phase 2 | September 1, 2022 |
| CMA Final Report | April 26, 2023 |
| Final Outcome | PROHIBITED |
| Date | Milestone |
|---|---|
| 2022-01-18 | Merger announced |
| 2022-09-01 | CMA refers for Phase 2 investigation |
| 2022-10-14 | Issues Statement published |
| 2023-02-08 | Provisional Findings: SLC in both console and cloud gaming |
| 2023-03-24 | Addendum: Provisional Findings revised (no SLC in console) |
| 2023-04-26 | Final Report: Merger prohibited |
| Party | Agreement Scope |
|---|---|
| Nintendo | 10-year Call of Duty availability on Switch |
| NVIDIA | Activision titles on GeForce Now cloud gaming |
| Boosteroid | Cloud gaming licensing |
| Ubitus | Cloud gaming licensing |
| Name | |
|---|---|
| Category | |
| Parties | Microsoft Corporation (Acquirer) |
| Parties | Activision Blizzard, Inc. (Target) |
| Parties | Sony Interactive Entertainment (Complainant) |
| Parties | UK Competition and Markets Authority (Regulator) |
| Key Gaming Content at Stake | Call of Duty (AAA shooter franchise) |
| Key Gaming Content at Stake | World of Warcraft (MMORPG) |
| Key Gaming Content at Stake | Overwatch (competitive shooter) |
| Key Gaming Content at Stake | Candy Crush / mobile portfolio |
| Core Findings | No SLC in console gaming services |
| Core Findings | SLC in cloud gaming services |
| Core Findings | Microsoft Cloud Remedy insufficient |
| Core Findings | Only prohibition effective |
| Primary Cloud Gaming Competitors | NVIDIA GeForce Now |
| Primary Cloud Gaming Competitors | Amazon Luna |
| Primary Cloud Gaming Competitors | Boosteroid |
| Primary Cloud Gaming Competitors | Ubitus |
| Primary Cloud Gaming Competitors | Shadow |
| Primary Cloud Gaming Competitors | Google Stadia (discontinued) |
41 nodes · 37 edges — drag to reposition, scroll to zoom, click node for details
Company: 10, Issue: 11, Milestone: 6, Product: 10, Regulator: 1, Remedy: 2, Verdict: 1
| type | name | snippet |
|---|---|---|
| Company | Microsoft Corporation | Acquirer in the proposed merger |
| Company | Activision Blizzard, Inc. | Target of the proposed merger |
| Company | Sony Interactive Entertainment | Primary complainant, owner of PlayStation |
| Company | Nintendo | Third-party with 10-year CoD agreement |
| Company | NVIDIA | GeForce Now cloud gaming provider |
| Company | Boosteroid | Cloud gaming provider with Microsoft agreement |
| Company | Ubitus | Cloud gaming provider with Microsoft agreement |
| Company | Amazon | Operates Amazon Luna cloud gaming |
| Company | Operated Stadia (discontinued) | |
| Company | Shadow | Cloud gaming competitor |
| Regulator | Competition and Markets Authority | UK competition authority conducting Phase 2 review |
| Product | Call of Duty | AAA shooter franchise central to TOH1 |
| Product | World of Warcraft | Activision MMORPG title |
| Product | Overwatch | Activision competitive shooter |
| Product | Xbox | Microsoft gaming console platform |
| Product | PlayStation | Sony gaming console platform |
| Product | Xbox Cloud Gaming | Microsoft cloud gaming service |
| Product | Game Pass | Microsoft multi-game subscription |
| Product | Azure | Microsoft cloud infrastructure |
| Product | Windows | Leading PC operating system |
| Product | GeForce Now | NVIDIA cloud gaming service |
| Issue | SLC in Cloud Gaming | Substantial Lessening of Competition in cloud gaming service |
| Issue | Ability to Foreclose Rivals | Microsoft's post-merger ability to withhold Activision conte |
| Issue | Incentive to Foreclose | Financial incentive to exclude rivals |
| Issue | Cloud Gaming Market Dynamism | Fast-growing, evolving market vulnerable to foreclosure |
| Issue | Microsoft Dominant Position | Xbox plus Windows plus Azure ecosystem advantage |
| Issue | CoD Importance to PlayStation | Franchise materiality to console rivalry |
| Issue | Remedy Circumvention Risk | High risk of avoiding remedy obligations |
| Issue | Remedy Scope Limitations | Excludes some business models and Linux OS |
| Issue | Monitoring Difficulty | Hard to enforce in evolving market |
| Issue | Uncertain Customer Benefits | RCBs not sufficiently certain to offset SLC |
| Issue | No SLC in Console Gaming | TOH1 dismissed on financial incentive analysis |
| Remedy | Microsoft Cloud Remedy | 10-year behavioural remedy offered by Microsoft, rejected by |
| Remedy | Prohibition | Only effective remedy per CMA final decision |
| Milestone | Merger Announcement | January 18, 2022 |
| Milestone | Phase 2 Referral | September 1, 2022 |
| Milestone | Issues Statement | October 14, 2022 |
| Milestone | Provisional Findings | February 8, 2023 - SLC in both markets |
| Milestone | Addendum to Provisional Findings | March 24, 2023 - console SLC dropped |
| Milestone | Final Report | April 26, 2023 - Merger prohibited |
| Verdict | PROHIBITED | Final CMA decision: the merger is prohibited |
| from | label | to |
|---|---|---|
| Microsoft Corporation | ACQUIRES | Activision Blizzard, Inc. |
| Competition and Markets Authority | REVIEWS | Microsoft Corporation |
| Competition and Markets Authority | REVIEWS | Activision Blizzard, Inc. |
| Competition and Markets Authority | RAISES | SLC in Cloud Gaming |
| Competition and Markets Authority | RAISES | Ability to Foreclose Rivals |
| Competition and Markets Authority | RAISES | Incentive to Foreclose |
| Competition and Markets Authority | RAISES | Cloud Gaming Market Dynamism |
| Competition and Markets Authority | RAISES | Microsoft Dominant Position |
| Competition and Markets Authority | RAISES | CoD Importance to PlayStation |
| Microsoft Corporation | PROPOSES | Microsoft Cloud Remedy |
| Microsoft Cloud Remedy | ADDRESSES | SLC in Cloud Gaming |
| Microsoft Cloud Remedy | HAS ISSUE | Remedy Circumvention Risk |
| Microsoft Cloud Remedy | HAS ISSUE | Remedy Scope Limitations |
| Microsoft Cloud Remedy | HAS ISSUE | Monitoring Difficulty |
| Microsoft Corporation | OWNS | Xbox |
| Microsoft Corporation | OWNS | Xbox Cloud Gaming |
| Microsoft Corporation | OWNS | Game Pass |
| Microsoft Corporation | OWNS | Azure |
| Microsoft Corporation | OWNS | Windows |
| Activision Blizzard, Inc. | OWNS | Call of Duty |
| Activision Blizzard, Inc. | OWNS | World of Warcraft |
| Activision Blizzard, Inc. | OWNS | Overwatch |
| Sony Interactive Entertainment | OWNS | PlayStation |
| NVIDIA | OWNS | GeForce Now |
| Xbox | COMPETES WITH | PlayStation |
| Xbox Cloud Gaming | COMPETES WITH | GeForce Now |
| Merger Announcement | FOLLOWED BY | Phase 2 Referral |
| Phase 2 Referral | FOLLOWED BY | Issues Statement |
| Issues Statement | FOLLOWED BY | Provisional Findings |
| Provisional Findings | FOLLOWED BY | Addendum to Provisional Findings |
| Addendum to Provisional Findings | FOLLOWED BY | Final Report |
| Final Report | RESULTS IN | PROHIBITED |
| Competition and Markets Authority | DECIDES | PROHIBITED |
| Microsoft Corporation | AGREES WITH | Nintendo |
| Microsoft Corporation | AGREES WITH | NVIDIA |
| Microsoft Corporation | AGREES WITH | Boosteroid |
| Microsoft Corporation | AGREES WITH | Ubitus |