The United Kingdom blocks Microsoft from its acquisition of Activision Blizzard

London (CNN) The UK antitrust regulator has blocked Microsoft’s $69 billion purchase of Activision Blizzard has frustrated a tech industry leader The biggest deals Because of concerns that it will stifle competition in cloud gaming.

The Competition and Markets Authority said in a statement On Wednesday he was concerned the deal would lead to “less innovation and fewer options for UK players over the coming years”.

acquisition will make Microsoft (MSFT) “Stronger” in cloud gaming, the regulator added, a market in which it already has a 60%-70% share globally.

Activision Blizzard is one of the largest video game developers in the world, producing games like “Call of Duty,” “World of Warcraft,” “Diablo,” and “Overwatch.” Microsoft, which sells the Xbox game console, offers a video game subscription service called Xbox Game Pass, as well as a cloud-based video game streaming service.

The business combination deal has been met with growing opposition from antitrust regulators around the world. In December, the US Federal Trade Commission File a lawsuit to prevent the takeover on similar competition concerns. Hearing scheduled for August. The European Union is too Deal evaluation

The Competition and Markets Authority said Microsoft may seek to make Activision games exclusive to its own platforms, thereby increasing the cost of a Game Pass subscription.

“The cloud allows UK gamers to avoid buying expensive game consoles and PCs and gives them more flexibility and choice in how they play. Allowing Microsoft to take such a strong position in the cloud gaming market once it begins to grow rapidly would risk undermining necessary innovation.” to develop these opportunities.

“Available evidence … indicates that, in the event of a non-merger, Activision will begin providing games across cloud platforms in the foreseeable future.”

Microsoft, Activision plan to resume

Both companies plan to appeal the decision. “Together with Microsoft, we can and will contest this decision, and we have already begun work to file an appeal with the UK Competition Appeal Tribunal,” Activision Blizzard CEO Bobby Kotick said in a statement.

“This decision appears to reflect a misunderstanding of the market and the way related cloud technology operates,” added Brad Smith, President of Microsoft.

The Competition and Markets Authority, which launched an in-depth review of the mega deal in September, said Microsoft’s proposed solutions to its concerns had “significant shortcomings”.

“Their proposals … would have replaced competition with ineffective regulation in a new, dynamic market,” explained Martin Coleman, chair of the independent panel of experts conducting the investigation.

“Microsoft already has a strong position and edge over other competitors in cloud gaming, and this deal will enhance that advantage, giving it the ability to undercut new and innovative competitors,” Coleman continued. “Cloud gaming needs a competitive, free market to drive innovation and choice.”

The UK cloud gaming market is expected to reach £1 billion ($1.2 billion) by 2026, about 9% of the global market, according to the Competition and Markets Authority.

——Josh Du Lac and Brian Fong contributed reporting.