Competition and Markets Authority of the United Kingdom has blocked Microsoft’s $68.7bn (£55bn) acquisition of video game company Activision Blizzard.
The proposed acquisition would result in Microsoft acquiring Call of Duty and Candy Crush, among other popular games.
However, the regulator expressed concern that the transaction would result in less innovation and fewer options for cloud gaming consumers.
Microsoft and Activision reacted negatively to the ruling and announced they would appeal.
A spokesperson for Activision stated, “The CMA’s report contradicts the UK’s aspirations to become an attractive country for building technology businesses.”
Britain is closed to commerce.
“We will aggressively work with Microsoft to overturn this ruling on appeal.”
“The report’s conclusions are a disservice to British citizens, whose economic prospects are deteriorating. We will revisit our growth strategies for the United Kingdom. Large and small global innovators will note that, despite its rhetoric, the United Kingdom is closed for business.
Microsoft’s vice chairman and president, Brad Smith, stated that the company remained committed to the acquisition.
The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom,” he said.
“We have already executed contracts to make Activision Blizzard’s popular games accessible on an additional 150 million devices. And we remain committed to enforcing these agreements via regulatory remedies.
“We are especially dissatisfied that, after extensive deliberation, this decision appears to be based on a flawed understanding of this market and how the relevant cloud technology operates.”
‘Undermine innovation’
The transaction must be authorized by regulatory bodies in the United Kingdom, the United States, and the European Union.
The first of the three authorities to rule, the CMA might scuttle the purchase.
The British organization expressed no concern that the transaction would distort competition in the console gaming market.
However, Martin Coleman, who presided over an independent panel that investigated the proposal for the regulator, stated that it was essential to safeguard competition in the “emerging and exciting market” of cloud gaming.
“Microsoft already enjoys a powerful position and head start over other competitors in cloud gaming, and this deal would strengthen that advantage, giving it the ability to undermine innovative new competitors,” he added.
Microsoft had submitted plans to resolve the CMA’s concerns, but they were ineffective and “would have replaced competition with ineffective regulation,” according to him.
“Cloud gaming requires an unfettered and competitive market to foster innovation and selection. “Letting cloud gaming’s competitive dynamics continue will work best,” he said.
