The ruling comes as a major setback for the US corporation which has been pursuing the Activision Blizzard buyout for some time. Microsoft claims the acquisition will benefit competition in the industry rather than stifling competition.
However, the CMA concluded that the deal raised competition concerns in the cloud gaming market.
“Microsoft has a strong position in cloud gaming services and the evidence available to the CMA showed that Microsoft would find it commercially beneficial to make Activision’s games exclusive to its own cloud gaming service,” the CMA said.
Microsoft currently makes up around 60-70% of global cloud gaming services.
The CMA noted the importance and future of cloud gaming, which gives gamers the chance to play without expensive gaming consoles.
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“Allowing Microsoft to take such a strong position in the cloud gaming market just as it begins to grow rapidly would risk undermining the innovation that is crucial to the development of these opportunities,” the CMA said.
Microsoft said it plans to appeal the CMA’s decision.
Brad Smith, Microsoft vice chair and president, said the decision “discourages technology innovation and investment in the United Kingdom.”
“The CMA’s decision rejects a pragmatic path to address competition concerns and discourages technology innovation and investment in the United Kingdom,” Smith said in a statement on Wednesday.
“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,” he added.
Smith accused the CMA of appearing to have a “flawed understanding of this market and the way the relevant cloud technology works.”