Microsoft blocks acquisition of video game maker Activision Blizzard – but vows to respond | Business News

Britain’s competition watchdog has blocked Microsoft’s takeover of video game maker Activision Blizzard.

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

That would be the highest price ever paid by a U.S. technology company in an acquisition.

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

“This transaction will strengthen Microsoft’s position in the market, giving Microsoft control over important gaming content such as Call of Duty, Overwatch and World of Warcraft,” the company said.

“The evidence obtained by the CMA suggests that, absent the merger, Activision would begin delivering games via cloud platforms for the foreseeable future.

“The cloud enables UK gamers to avoid expensive consoles and PCs and gives them more flexibility and choice in how they play.

“Giving Microsoft such a strong position as the cloud gaming market begins to grow rapidly could undermine innovation that is critical to the development of these opportunities.”

While the all-cash deal is expected to be the largest in tech industry history, it also faces scrutiny from U.S. and European regulators.

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“We remain in full support of this acquisition and will appeal,” Microsoft President Brad Smith said.

He said the CMA’s decision “rejects a pragmatic approach to addressing competition concerns” and hinders technological innovation and investment in the UK.

He added: “We are particularly disappointed that, after lengthy deliberation, this decision appears to reflect an incorrect understanding of how this market and related cloud technologies actually work.”

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

Activision Blizzard shares drop 12% on news of CMA decision

Activision Blizzard fell more than 10 percent in premarket trading, while Microsoft fell 2.25 percent, denting sentiment.

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