Microsoft’s £55bn takeover of the maker of the Call of Duty series of games has been blocked by the UK’s competition watchdog.
The tech giant had tried to buy video game company Activision Blizzard for $68.7bn but the Competition and Markets Authority (CMA) said it had prevented the major deal over concerns in the cloud gaming sector.
A deal for the purchase of the Crash Bandicoot and Candy Crush publisher by the Xbox manufacturer had been struck in January 2022.
Martin Coleman, chair of the independent panel of experts conducting the CMA investigation, said: “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 new and innovative competitors.
“Microsoft engaged constructively with us to try to address these issues and we are grateful for that, but their proposals were not effective to remedy our concerns and would have replaced competition with ineffective regulation in a new and dynamic market.”
Brad Smith, vice chair and president of Microsoft, said it remained committed to the acquisition and will appeal against the CMA’s ruling.
“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 signed contracts to make Activision Blizzard’s popular games available on 150 million more devices and we remain committed to reinforcing these agreements through regulatory remedies.
“We’re especially disappointed that after lengthy deliberations, this decision appears to reflect a flawed understanding of this market and the way the relevant cloud technology actually works.”
Activision Blizzard said claimed CMA’s report “contradicts the ambitions” of the UK to become an attractive country to build technology businesses.
A spokesperson said: “We will work aggressively with Microsoft to reverse this on appeal.
“The report’s conclusions are a disservice to UK citizens, who face increasingly dire economic prospects.
“We will reassess our growth plans for the UK. Global innovators large and small will take note that – despite all its rhetoric – the UK is clearly closed for business.”