Purchase of Activision Blizzard by Microsoft, which would have cost the company a total of $69 billion, has been halted by the antitrust authority in the United Kingdom. This puts an end to one of the most lucrative business transactions in the history of the technology sector.
In a statement released on Wednesday, the Competition and Markets Authority expressed concern that the proposed merger will have a negative impact on the future of the rapidly expanding cloud gaming business. This, in turn, would result in less opportunities for innovation and fewer options available to players in the United Kingdom in the years to come.
According to the regulator, the acquisition would allow Microsoft to strengthen its position in the cloud gaming sector, where it now owns a share of between 60 and 70 percent internationally.
Both businesses are planning to challenge the ruling. Activision Blizzard CEO Bobby Kotick issued the following statement in response to the verdict: “Alongside Microsoft, we can and will contest this decision, and we’ve already begun the work to appeal to the UK Competition Appeals Tribunal,”
In addition, the President of Microsoft, Brad Smith, stated that “this decision appears to reflect a flawed understanding of the market and the way the relevant cloud technology actually works.”\
The Competition and Markets Authority, which began an in-depth investigation of the blockbuster acquisition in September, stated that the suggested remedies that Microsoft had developed in response to its concerns possessed “significant shortcomings.”
According to Martin Coleman, the chair of the independent panel of experts that is conducting the inquiry, “their proposals… would have replaced competition with ineffective regulation in a new and dynamic market.” This information was provided by Mr. Coleman.
“Microsoft already enjoys a powerful position and a head start over other competitors in cloud gaming, and this deal would strengthen that advantage, giving it the ability to undermine new and innovative competitors,” concluded Coleman. “In order to foster innovation and selection, cloud gaming requires the existence of a free and competitive market.”
According to the Competition and Markets Authority, the market for cloud gaming in the United Kingdom might reach up to £1 billion ($1.2 billion) by the year 2026. This would represent around 9% of the industry globally.