UK BLOCKS MICROSOFT-ACTIVISION GAMING DEAL, BIGGEST IN TECH

British antitrust regulators this week blocked Microsoft’s $69 billion purchase of video game maker Activision Blizzard, thwarting the biggest tech deal in history over worries that it would stifle competition for popular titles like Call of Duty in the fast-growing cloud gaming market.

The Competition and Markets Authority said in its final report that “the only effective remedy” to the substantial loss of competition “is to prohibit the Merger.” The companies have vowed to appeal.

The all-cash deal announced 15 months ago faced stiff opposition from rival Sony, which makes the PlayStation gaming system, and also was being scrutinized by regulators in the U.S. and Europe over fears that it would give Microsoft and its Xbox console control of hit franchises like Call of Duty and World of Warcraft. 

The U.K. watchdog’s decision “came as a surprise to most people” and heightens global uncertainty over the deal, said Liam Deane, a game industry analyst for research firm Omdia.

“It’s a big enough market to throw a pretty serious spanner in the works from Microsoft and Activision’s perspective, but things will get a lot worse if they also get the wrong decision from the European Commission in a few weeks time,” he said.

The U.K. watchdog’s concerns centered on how the deal would affect cloud gaming, which streams to tablets, phones and other devices and frees players from buying expensive consoles and gaming computers. Gamers can keep playing major Activision titles, including mobile games like Candy Crush, on the platforms they typically use.

Cloud gaming has the potential to change the industry by giving people more choice over how and where they play, said Martin Colman, chair of the Competition and Markets Authority’s independent expert panel investigating the deal.

“This means that it is vital that we protect competition in this emerging and exciting market,” he said.