British regulators on Wednesday blocked Microsofts $69 billion purchase of video game maker Activision Blizzard, thwarting the biggest tech deal in history over worries that it would stifle competition in the fast-growing cloud gaming market.
The Competition and Markets Authority said in its final report that the only effective remedy to the substantial loss of competition is to prohibit the Merger. The companies have vowed to appeal.
The all-cash deal faced stiff opposition from rival Sony and was also being scrutinized by regulators in the U.S. and Europe over fears that it would give Microsoft control of popular game franchises like Call of Duty, World of Warcraft and Candy Crush.
The U.K. watchdogs concerns centered on how the deal would affect competition in cloud gaming, which involves streaming games to tablets, phones and other devices. That frees players from the need to buy expensive consoles and gaming computers.
Cloud gaming has the potential to change the industry by giving people more choice over how and where they play, said Martin Colman, chair of the Competition and Markets Authoritys independent expert panel investigating the deal.
This means that it is vital that we protect competition in this emerging and exciting market, he said.
Microsoft said it was disappointed and signaled it wasnt ready to give up.
We remain fully committed to this acquisition and will appeal, President Brad Smith said in a statement. He said the watchdogs decision rejects a pragmatic path to address competition concerns and discourages tech innovation and investment in the United Kingdom.
Were especially disappointed that after lengthy deliberations, this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works, Smith said.
Activision also fired back, saying it would work aggressively with Microsoft to reverse this on appeal.
Regulators had dropped concerns last month that the deal would hurt console gaming, saying it wouldnt benefit Microsoft to make Call of Duty exclusive to its Xbox console.
The watchdog said Wednesday that it reviewed Microsofts proposals to ease competition concerns in considerable depth but found those solutions would require its oversight, whereas preventing the merger would allow cloud gaming to develop without intervention.
Microsoft already has a strong position in the cloud computing market and regulators concluded that if the deal went through, it would reinforce the companys advantage by giving it control of key game titles.
