The UK blocks the game deal between Microsoft and Activision, the largest in the field of technology

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LONDON – British antitrust regulators on Wednesday blocked Microsoft’s $69 billion purchase of video game maker Activision Blizzard, thwarting the biggest tech deal in history over concerns it would stifle competition for popular titles like Call of Duty in the rapidly growing cloud gaming market.

The Competition and Market Authority stated in its final report that the only effective remedy to the substantial loss of competition is the prohibition of the Merger. The companies have promised to appeal.

The cash deal announced 15 months ago has met stiff opposition from rival Sony, which makes the PlayStation gaming system, and has also been scrutinized by regulators in the US and Europe over fears it would give a Microsoft and its Xbox console control of successful franchises. such as Call of Duty and World of Warcraft.

The UK watchdog’s decision came as a surprise to most people and adds to global uncertainty about the deal, said Liam Deane, games industry analyst for research firm Omdia.

It’s a large enough market to throw a pretty serious wrench in the works from the perspective of Microsoft and Activision, but things will be a lot worse if they get even the wrong decision from the European Commission in a few weeks, he said.

Concerns from UK watchdogs focused on how the deal would affect cloud gaming, which streams to tablets, phones and other devices and frees gamers from buying expensive gaming consoles and computers. Gamers can continue to play major Activision titles, including mobile games like Candy Crush, on their usual platforms.

Cloud gaming has the potential to change the industry by giving people more choices in how and where to play, said Martin Colman, chair of the Competition and Markets Authority’s independent think tank that is investigating the deal.

That means it’s crucial to protect competition in this exciting and emerging market, he said.

The decision underscores Europe’s reputation as a global leader in efforts to curb the power of Big Tech companies. A day earlier, the UK government unveiled draft legislation that would give regulators more power to protect consumers from online scams and fake reviews and increase digital competition.

The UK’s decision further dashed Microsoft’s hopes that a successful outcome could help it settle a lawsuit filed by the US Federal Trade Commission. A trial before the FTC’s domestic judge will begin Aug. 2. The European Union’s decision, meanwhile, is expected on May 22.

Activision lashed out, describing the watchdog’s decision as a bad sign for international investors in the UK at a time when the British economy faces severe challenges.

The California-based game maker said it would work aggressively “with Microsoft to appeal, saying the move contradicts the UK’s ambitions” to be an attractive place for tech companies.

“We will reevaluate our growth plans for the UK. Global innovators large and small will take note that for all its rhetoric, the UK is clearly closed for business,” Activision said.

Microsoft, based in Redmond, Washington, has also signaled it is not ready to give up.

We remain fully committed to this acquisition and will appeal, Chairman Brad Smith said in a statement. The decision rejects a pragmatic path to address competition concerns” and discourages technological innovation and investment in Britain, he said.

We’re especially disappointed that, after much discussion, this decision appears to reflect a misunderstanding of this market and how related cloud technology actually works, Smith said.

Activision CEO Bobby Kotick said in a blog post that both companies have begun work on an appeal in the UK Competition Appeals Tribunal.

It’s not the first time UK regulators have flexed their antitrust muscles over a Big Tech deal. They previously blocked Facebook’s parent company Metas from buying Giphy over fears it would limit innovation and competition. The social media giant appealed the court’s decision, but lost and was forced to sell the GIF-sharing platform.

Microsoft already holds a strong position in the global cloud computing market, and regulators have concluded that if the deal goes through, it would solidify the company’s lead by giving it control of key game titles.

In an effort to ease the concerns, Microsoft has struck deals with Nintendo and some cloud gaming providers to license Activision titles like Call of Duty for 10 years while offering the same to Sony.

Sony’s European press office did not respond to a request for comment.

The watchdog said it had thoroughly investigated Microsoft’s remedies but found they would require its oversight, while preventing the merger would allow cloud gaming to flourish without intervention.

Cloud gaming is a small slice of the £5bn ($6.2bn) UK video game market. But an expert forecast has suggested it will see explosive growth over the next few years, with the number of users tripling from early 2021 to late 2022 and the cloud gaming market expected to grow to £1bn worth by 2022. 2026, regulators said.

Last month they dropped concerns that the deal would hurt console gaming, saying it wouldn’t be beneficial for Microsoft to make Call of Duty exclusive to its Xbox console.

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AP Technology writer Matt O’Brien of Providence, Rhode Island contributed to this report.

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