Microsoft’s gargantuan purchase of Activision-Blizzard drove into another rut Wednesday after the U.K.’s Competition and Market Authority announced it would block the merger.
The authority said Microsoft’s share of the cloud gaming market is so huge, adding Activision-Blizzard would create a “most powerful operator.”
Cloud gaming is where a customer can stream a game directly from a company’s server in an on-demand style.
The CMA originally focused its antitrust investigation on the prospect that the deal would limit competition and options for console gamers on the Sony PlayStation, Microsoft’s biggest competitor. However, this decision marks a clear departure from a console gaming focus to that of cloud gaming.
The U.K. agency noted that Microsoft has a 60% cloud market share in the country. Due to the proliferation of the Windows operating system, owned by Microsoft, the company’s cloud gaming infrastructure is unrivaled.
Microsoft President Brad Smith said he was disappointed with the CMA’s decision.
“We remain fully committed to this acquisition and will appeal. The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom,” Mr. Smith said in a statement. “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 echoed the executive’s statement. The gaming company said it will join Microsoft in appealing the decision.
The mammoth-sized merger has faced close scrutiny since it was announced in January.
In the U.S., the Federal Trade Commission is suing to block the deal. The FTC pointed to how a merger of this size would hurt competition.
The European Commission is poised to launch its own investigation into the deal next month.
• Vaughn Cockayne can be reached at vcockayne@washingtontimes.com.
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