UK Competition and Markets Authority Anti-Merger Ruling Undermines Consumer Interests

The UK’s Competition and Markets Authority (CMA) is blocking Microsoft’s $69 billion acquisition of video game developer Activision Blizzard out of fear the deal would make the video game market less competitive, especially in the emerging cloud gaming market. That fear is misplaced and undermines consumer interests, argue CEI technology and antitrust experts.

Alex Reinauer, CEI Research Fellow:

“The CMA’s blocking of the Microsoft/Activision deal will harm gamers the most. Cloud gaming is still an emerging technology, and this antitrust intervention will limit the ability to distribute popular gaming titles to the most amount of people at the best possible price for consumers.

“The CMA assumes Microsoft would withhold popular Activision games like Call of Duty and World of Warcraft from competing platforms, but history shows otherwise. In 2014, Microsoft purchased the Minecraft developer Mojang, and now Minecraft is the highest selling game in history and  available on nearly every competing platform, including Apple’s iOS and Sony’s PlayStation. The CMA’s decision is a detriment to competition and consumers.”

Ryan Young, CEI Senior Economist:

“Microsoft’s arch-competitor Sony’s vocal opposition to the acquisition signals their belief the deal would make the video game market more competitive. If Sony thought Microsoft was about to shoot itself in the foot, Sony would instead have either encouraged the deal or stayed silent in hopes that its competitor would make a $69 billion mistake.

“If the CMA decision is reversed on appeal and the deal does end up happening, the market will give its verdict. If the CMA’s decision stands, or if the FTC’s case in the U.S. succeeds, then regulators will be substituting their personal judgment for that of millions of consumers, who are this case’s rightful judges.”

Jessica Melugin, Director of CEI’s Center on Technology and Innovation:

“This is the height of regulatory arrogance considering the UK can’t boast even one of the top ten tech firms globally, but its regulators look to intervene in the international marketplace. Instead of getting in the way of innovations for consumers, the CMA should be looking at how to foster a thriving domestic tech sector of its own.”

Iain Murray, CEI Senior Fellow:

 “The UK’s Competition and Markets Authority is out of control and setting itself up as the world’s antitrust regulator. No tech company should even think about operating there under these circumstances. Despite its Prime Minister’s protestations to the contrary, the UK has shown itself to be deeply hostile to innovation.”