Britain argued that blocking Microsoft’s $69 billion acquisition of US video game company Activision Blizzard would undermine cloud gaming competition and put the record-breaking merger in jeopardy.
In a final ruling on its protracted investigation, the UK’s Competition and Markets Authority said it blocked the merger “out of concerns that (it) would alter the future of the rapidly expanding cloud gaming market, leading to reduced innovation and less choice for UK gamers over the years to come.”
Microsoft retorted that it will challenge the decision about its massive acquisition, which has not yet received regulatory approval in Europe or the US.
By acquiring Activision, maker of the popular games “Candy Crush” and “Call of Duty,” the Xbox owner began its effort to become the third-largest gaming firm in the world by revenue in 2022, raising antitrust worries around the globe.
The CMA stated on Wednesday that Microsoft’s suggested remedies for cloud gaming had “significant shortcomings” and would call for additional regulatory monitoring rather than letting the market decide.
“Preventing the merger would effectively allow market forces to continue to operate and shape the development of cloud gaming without this regulatory intervention,” the statement continued.
The CMA investigation’s independent team of experts, led by Martin Coleman, claimed the historic agreement would have given Microsoft even greater sway over competitors.
According to Coleman, “Microsoft already has a strong position and an advantage over other competitors in cloud gaming, and this deal would bolster that advantage and give it the power to thwart new and innovative competitors.”
“Microsoft constructively engaged with us to try to address these issues, and we are grateful for that, but their proposals were insufficient to address our concerns and would have replaced competition with ineffective regulation in a new and dynamic market,” the company said.
The announcement comes one month after the CMA, after determining that Microsoft’s agreement would not harm competition in respect to console gaming, narrowed the focus of its investigation to cloud gaming.
However, it claimed on Wednesday that for the video game sector to prosper, there must be competition.
“Cloud gaming needs a free, competitive market to drive innovation and choice,” Coleman continued.
The easiest way to accomplish that is to let the current competitive dynamics in cloud gaming continue to function.