Game changer… Yesterday, UK regulators said they’d block Microsoft's $69B acquisition of Activision Blizzard, worsening the chances of the deal’s approval. Microsoft’s bid to buy the Call of Duty maker (which would be the largest tech deal ever) has been on ice as regulators worry the merger would hurt competition. The Xbox maker has struck deals with rivals like Nintendo and Nvidia to share its gaming treasures to win support for the Activision-quisition.
Stiff odds: The FTC is still evaluating the merger after suing to block it in December, and the EU is set to make a formal decision next month.
High stakes: Microsoft’s already planning to appeal the UK’s decision, but if it fails (or if other regulators nix it) it’ll owe Activision $3B in break-up fees.
Cloud cover… By some estimates, Microsoft already controls 60%+ of global cloud-gaming services, and its Xbox Game Pass has 25M+ subscribers. For reference: Sony's PSNow cloud-gaming service had just 3M subs before it was replaced last year. Now regulators argue that Microsoft's ownership of Activision's billion-dollar franchises (like: Call of Duty, World of Warcraft) would make it tougher for others to compete.
Buyers, beware… The UK’s decision is a rare win for supporters of Big Tech regulation, and it could prompt more crackdowns in the US, where major antitrust rulings have been scarce. As governments get tougher on protecting competition, tech biggies may have to revisit their M&A strategies, or risk losing billions if they fail.