UK blocks Microsoft's $69bn acquisition of Activision over cloud gaming concerns

Microsoft's planned acquisition of Activision Blizzard for $69 billion has been blocked by the UK Competition and Markets Authority (CMA) over concerns the deal would stifle competition in the cloud gaming industry. The CMA said that the acquisition could make Microsoft even stronger in cloud gaming, making it difficult for competitors to keep up. Instead, the CMA ruled that cloud gaming needs a free, competitive market to drive innovation and choice. The decision is a blow to what would have been the biggest-ever deal in gaming, as the two companies sought to combine Microsoft's cloud computing resources with Activision's popular games such as Call of Duty and World of Warcraft.

The CMA's decision comes as cloud gaming, which allows players to stream games to devices without the need for powerful consoles or computers, is becoming increasingly popular. The market for cloud gaming is estimated to be worth £11 billion ($15 billion) globally by 2026. Microsoft currently offers Xbox Game Pass, a subscription service for Xbox players, and PC Game Pass for PC users.

Microsoft and Activision have both committed to appealing the UK's decision, and the European Union and US Federal Trade Commission are yet to rule on the merger. In 2020, Microsoft acquired Bethesda, the company behind Skyrim and Fallout, in a $9 billion deal, and has said that its next three major games from the developer would be exclusive to its Xbox and PC platforms. The gaming industry has been dominated by Microsoft, Sony, and Nintendo for the past 20 years, but the CMA suspects the emerging cloud gaming technology could challenge the monopoly.