UK Blocks Microsoft’s Acquisition of Activision Blizzard

London (CNN) It is with the UK antitrust regulator blocked Microsoft bought Activision Blizzard for $69 billion, breaking one in the tech industry. Huge deals There are concerns that this will stifle competition in cloud gaming.

Competition and Market Authority a Report Wednesday worried the deal would lead to “less innovation and less choice for UK gamers in the coming years”.

will make the acquisition Microsoft (MSFT) “Even stronger” in cloud gaming, a market where it already has a 60%-70% share globally, the regulator added.

Activision Blizzard is one of the world’s largest video game developers, having developed games such as “Call of Duty,” “World of Warcraft,” “Diablo” and “Overwatch.” Microsoft, which sells the Xbox gaming console, also offers a video game subscription service called Xbox Game Pass, as well as a cloud-based video game streaming service.

The deal to merge the businesses has met with growing opposition from antitrust regulators around the world. In December, the US Federal Trade Commission sued to block the takeover On similar competitive concerns. A hearing is scheduled for August. So is the European Union Evaluating the transaction

Microsoft may seek to make Activision’s games exclusive to its own platforms and then raise the price of a Game Pass subscription, the Competition and Markets Authority said.

“The cloud allows UK gamers to avoid buying expensive gaming consoles and PCs, and gives them more flexibility and choice in how they play. Allowing Microsoft to take such a strong position in the cloud gaming market is dangerous. It undermines innovation that is vital to the growth of these opportunities,” it added.

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“Available evidence… indicates that Activision will begin delivering games via cloud platforms in the near future, if not merged.”

Microsoft, Activision plan to appeal

Both companies plan to appeal the decision. “Together with Microsoft, we will fight this decision and we have already begun work on an appeal to the UK Competition Appeal Tribunal,” Activision Blizzard CEO Bobby Kotick said in a statement.

Microsoft president Brad Smith added: “This decision reflects a misunderstanding of the market and the way related cloud technology actually works.”

The Competition and Markets Authority, which launched an in-depth review of the Blockbuster deal in September, said Microsoft’s proposed solutions to its concerns were “significantly flawed”.

“Their proposals … would have transformed competition through ineffective regulation in a new and dynamic market,” explained Martin Coleman, chairman of the independent panel of experts conducting the inquiry.

“Microsoft already enjoys a powerful position over other competitors in cloud gaming, and this deal will strengthen that advantage, giving it the ability to undermine new and innovative competitors,” Coleman continued. “Cloud gaming needs a free, competitive market to drive innovation and choice.”

According to the Competition and Markets Commission, the UK cloud gaming market is expected to be worth £1 billion ($1.2 billion) by 2026, accounting for 9% of the global market.

— Josh Du Lac and Brian Fung contributed reporting.

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