Activision’s CEO Calls UK Decision to Block $69 Billion Microsoft Deal ‘Irrational’

Activision Blizzard Inc. Chief Executive Officer Bobby Kotick called UK regulators’ decision to block Microsoft Corp.’s $69 billion acquisition of his company “irrational” and predicted the deal will ultimately win approval.

In a Bloomberg Television interview, Kotick didn’t say whether the companies would extend their purchase agreement beyond a July deadline. The pair are preparing their response to the UK decision, he said, adding, “I think the appeals process will work in our favor.”

On Wednesday, the UK’s Competition and Markets Authority decided the deal would give Microsoft an unfair leg up in cloud gaming, which involves streaming video games from data centers to a broad range of devices.

Microsoft wouldn’t have enough incentive to put Activision games like Call of Duty, Overwatch 2 and World of Warcraft on competing gaming services, the regulator concluded. If Microsoft doesn’t win on appeal, the UK decision could put an end to the deal. The merger agreement expires July 18, though the companies could extend it.

Kotick said the importance the CMA put on cloud gaming is overblown.

“Cloud gaming is an inconsequential part of the business,” he said, with mobile gaming taking a much bigger piece of the global market.

Gamers will continue to access titles without cloud technology on increasingly powerful mobile phones, PCs and consoles, he said.

Microsoft “made it very clear that they were willing and will continue to offer cloud gaming content to any cloud provider,” Kotick said. “The idea that somehow you are protecting all of these big, foreign competitors from market competition makes no sense.”

While Microsoft hopes to bolster its Game Pass game subscription service, which has a cloud gaming offering, with Activision’s slate of games, the company has also explored the possibility of launching its own mobile gaming store, which could compete with Apple Inc. ’s App Store and Google’s Play Store.

“The opportunity we have with Microsoft is to give them more access to mobile talent, mobile technology, and that is something they saw as incredibly valuable,” Kotick said.

With Activision subsidiary King, maker of hit mobile game Candy Crush, Microsoft would have a leg up in mobile gaming, where it currently has almost no footprint.

On Monday, Apple won an appeals court ruling upholding App Store policies that exclude third-party app marketplaces, which could introduce complications to Microsoft’s plans.

Activision wants to merge with Microsoft so the company can compete with tech giants Netflix Inc., Tencent Holdings Ltd. and Google on emerging technologies such as artificial intelligence and machine learning.

“There is an enormous amount of talent at Microsoft, that if we were to have access to, would allow us to grow even better,” Kotick said.