The UK Antitrust regulator has blocked Microsoft’s $69 billion acquisition of Activision Blizzard. This is one of the biggest tech deals in history, as it fears that the deal will reduce competition on the cloud gaming market.
In a statement released on Wednesday, the Competition and Markets Authority expressed concern that the deal could alter the future of cloud gaming in the UK. This would lead to less innovation and fewer choices for UK players over the coming years.
The regulator said that the deal would strengthen Microsof's (MSFT) position in cloud gaming. Microsof currently holds 60-70% of this market globally.
Both companies intend to appeal the ruling. 'Alongside Microsoft we can and will challenge this decision and we've started the work to appeal before the UK Competition Appeals Tribunal', said Activision Blizzard's CEO Bobby Kotick in a press release.
Microsoft President Brad Smith said: "This decision seems to reflect a flawed knowledge of the market, and how the relevant cloud technologies actually work."
Microsoft's remedies for its concerns were deemed to have'significant flaws' by the Competition and Markets Authority (CMA), which conducted an in-depth investigation of the blockbuster agreement in September.
Martin Coleman, the chair of an independent panel of expert investigators, said that 'their proposals...would have replaced competition with ineffective regulations in a dynamic and new market'.
Coleman added, 'Microsoft enjoys an advantage and a head start in the cloud gaming market, and this agreement would strengthen it, giving it a chance to undercut new and innovative competitors.' Cloud gaming requires a competitive, free market in order to promote innovation and choice.
According to the Competition and Markets Authority, the UK cloud gaming market could be worth as much as PS1 billion ($1.2billion) by 2026. This represents around 9% the global market.