The UK's Competition and Markets Authority (CMA) on Wednesday blocked Microsoft's planned acquisition of Activision Blizzard for £55 billion (nearly $69 billion) due to concerns that it could result in reduced innovation and less choice for gamers in the rapidly growing cloud gaming industry.
"Microsoft’s solution had significant shortcomings and would require regulatory oversight by CMA," the government said in a statement.
The deal would have given Microsoft ownership of popular titles such as Call of Duty and Candy Crush.
The CMA, however, did not express any worries about the deal distorting competition in the console gaming market.
The decision to block the acquisition was made to protect competition in the emerging market of cloud gaming.
Both Microsoft and Activision Blizzard have announced their intention to appeal the decision.
The UK's cloud gaming market is rapidly expanding, with the number of monthly active users growing more than threefold from the beginning of 2021 to the end of 2022, according to government figures.
It is expected to be worth up to £11 billion worldwide and £1 billion in the UK by 2026.
With its ownership of Xbox, the leading PC operating system (Windows), and a global cloud computing infrastructure (Azure and Xbox Cloud Gaming), Microsoft already controls an estimated 60-70% of the global cloud gaming market, AA reports.
