Competition watchdog blocks Microsoft bid to buy video game maker Activision Blizzard

The British competition watchdog has blocked Microsoft’s bid to buy video game maker Activision Blizzard.

The Competition and Markets Authority (CMA) stopped the $68.7bn (£55bn) deal due to concerns that it would stifle competition in the cloud gaming market.

In its final report on Wednesday, the CMA said that the move was “the only effective remedy” to competition concerns.

It said: “The deal would reinforce Microsoft’s advantage in the market by giving it control over important gaming content such as Call of Duty, Overwatch, and World of Warcraft.

“The evidence available to the CMA indicates that, absent the merger, Activision would start providing games via cloud platforms in the foreseeable future.

“The cloud allows UK gamers to avoid buying expensive gaming consoles and PCs and gives them much more flexibility and choice as to how they play.

“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 all-cash deal was on track to be the biggest in the history of the tech industry but it also faces scrutiny from regulators in the US and Europe.

Microsoft President Brad Smith said: “We remain fully committed to this acquisition and will appeal.”

He said the CMA’s decision “rejects a pragmatic path to address competition concerns” and discourages tech innovation and investment in the UK.

“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,” he added.

Activision said it would “work aggressively with Microsoft to reverse this on appeal”.

News of the CMA’s decision sent shares in Activision Blizzard down 12%

Denting sentiment, Activision Blizzard fell more than 10% in pre-market trading while Microsoft was down 2.25%.