The deal between Microsoft and Activision Blizzard has been blocked by the British regulator

The UK's Competition and Markets Authority (CMA) has made a surprising decision to block the Microsoft and Activision Blizzard deal. The regulator is concerned that the deal could seriously impact the future of the cloud gaming market and limit innovation and choice for British users. CMA noted that there were significant shortcomings in Microsoft's proposal to address potential issues, and the regulator would have had to monitor the situation constantly.

The cloud gaming market is rapidly growing, and its value worldwide is expected to reach around £11 billion by 2026, including £1 billion in the UK. CMA believes that Microsoft could benefit greatly from the exclusive placement of Activision games on its cloud services, which could lead to a reduction in choice in the market.

Currently, Microsoft has 60-70% of cloud services, and the company has other advantages in this area. Under Microsoft's control will be major franchises like Call of Duty and World of Warcraft, which could strengthen its potential influence on the sector. If the deal falls through, Activision will release its projects on cloud services itself, giving greater freedom of choice to players in the UK, not necessarily tied to the Microsoft platform.

Microsoft's proposal to address issues related to this deal, including establishing certain conditions over the next ten years, according to CMA, did not take into account various cloud business models, including subscription services. This proposal also limited the dynamic and creative elements of competition in the market.

CMA also expressed concerns about potential conflicts between Microsoft and other cloud services due to the company's ownership of the largest Activision franchises. The regulator believes that the deal could harm British gamers overall, particularly given Microsoft's possible intention to raise prices for Game Pass to justify including Activision games in the service catalog.