Microsoft’s $68bn bid to buy game studio Activision Blizzard has been blocked by the UK’s competition authority.
When the Xbox maker unveiled its planned purchase last year it said the tie-up would accelerate the growth of its gaming business across mobile, PC, console and cloud.
The deal, which would have given Microsoft ownership of the Call of Duty, Warcraft, Diablo, Overwatch, and Candy Crush franchises, was strongly opposed by a number of entities, including Sony who argued it would give its rival too much control over key titles.
In February the UK’s Competition and Markets Authority published a provisional view which opposed the deal on the basis that it would result in higher prices, fewer choices and less innovation.
In response, Microsoft offered a number of undertakings, including guaranteeing the supply of certain titles to other platforms for a ten-year period.
However, the CMA has now rejected this offer and in its final ruling reiterated its view that the tie-up would reduce innovation and lead to less choice for gamers in the cloud gaming sector.
But, despite blocking the deal due to concerns about its impact on the cloud gaming sector, the CMA did find that it “would not substantially reduce competition” in the UK’s wider console market.
Explaining why it rejected Microsoft’s proposed remedies, the CMA said acceptance “would inevitably require some degree of regulatory oversight by the CMA.
“By contrast, preventing the merger would effectively allow market forces to continue to operate and shape the development of cloud gaming without this regulatory intervention.”
Martin Coleman, chair of the independent panel of experts which conducted the CMA’s investigation, said: “Cloud gaming is growing fast with the potential to change gaming by altering the way games are played, freeing people from the need to rely on expensive consoles and gaming PCs and giving them more choice over how and where they play games.
“This means that it is vital that we protect competition in this emerging and exciting market.”
Brad Smith, Microsoft’s Vice Chair and President, said the firm remained “fully committed to our acquisition… and will appeal today’s determination by the CMA.”
He added that the decision “discourages technology innovation and investment in the United Kingdom.”